Wintermute: BOJ Shock Disrupts Crypto, But Market Structure Signals Potential Consolidation
In Brief
Wintermute reports that despite a BOJ-driven sell-off disrupting short-term stabilization, crypto markets have improved, setting the stage for potential consolidation.
Algorithmic trading firm Wintermute released its latest market update, highlighting that recent developments from the Bank of Japan (BOJ) disrupted last week’s stabilization in cryptocurrency markets and triggered widespread deleveraging. The firm noted that market structure has since recalibrated, with lower leverage, neutral funding, and stronger spot participation, while major cryptocurrencies now appear less vulnerable despite macro-driven volatility.
Wintermute’s report indicates that the Thanksgiving period offered a brief period of stabilization following weeks of forced selling. Bitcoin steadily climbed from the mid-$80,000s to the low-$90,000s, supported initially by improved retail flows and later positive institutional activity. This recovery followed a roughly 30% drawdown since early October, with total cryptocurrency market capitalization hovering near $3 trillion, providing a welcome reprieve for investors.
However, the respite proved short-lived. On Monday, markets reacted to signals from Japan that a rate hike at the December 19th BOJ meeting is under active consideration. This marks the second instance in a month where markets had to contend with potential hawkish shifts from the central bank. Changes in Japan’s risk-free rate are closely watched due to the carry trade and its influence on global funding. When Japanese Government Bond (JGB) yields rise, the economics of this trade compress immediately, prompting deleveraging across assets financed through yen. Given cryptocurrency’s sensitivity to liquidity and global funding dynamics, it was particularly exposed to these shifts.
The sell-off coincided with one of the year’s thinnest liquidity windows, amplifying the mechanical impact of each unwind. Bitcoin fell roughly $4,000 before European markets opened, not due to structural vulnerabilities but because of limited depth.
Meanwhile, gold rallied during the same period, underscoring that in true risk-off scenarios, defensive capital continues to default to traditional safe-haven assets. Wintermute emphasized that while Bitcoin maintains its “digital gold” narrative under stable conditions, it has yet to achieve safe-haven status in episodes of acute macro stress.
Beyond macro influences, sentiment in the cryptocurrency sector remains low, with negative narratives prevailing and little optimism driving market enthusiasm. From a structural perspective, however, conditions beneath the surface have improved. Basis has collapsed to cycle lows, with 90-day annualized BTC basis near 4–5% and ETH near 3–4%, reflecting ongoing directional, levered-long exposure. Funding rates across major cryptocurrencies have reset to neutral or negative levels for the first time since October, while total perpetual open interest has declined from $230 billion in early October to $135 billion, reducing excess leverage and the risk of further mechanical liquidations. Spot trading has captured a larger share of volume, and depth has remained resilient despite the holiday period. Wintermute notes that these shifts—lower leverage, negative funding, and healthier spot participation—typically precede market consolidation once macro conditions stabilize.
Currently, major cryptocurrencies are trading largely in line with macro trends, while smaller-cap tokens show brief, isolated strength before broader flows dominate. Narrative-driven gains in major assets are still often used as opportunities to exit positions, reflecting the prevailing view that liquidity will return first to the largest coins.
Market performance over the period was broadly weak, with high-beta areas experiencing the largest declines: AI tokens fell 14.4%, DePIN 13.6%, gaming 12.7%, Layer 2 solutions 12.5%, small caps 10.4%, mid caps 9.7%, and Layer 1s 7.0%. The GMCI-30 index fell 7.3%. Although Layer 1 networks and the GMCI-30 fared relatively better, the sell-off was largely indiscriminate and driven by macro factors.
Underlying Market Strength Returns Amid Macro Volatility In Crypto
Last week’s support zone provided a temporary period of stability, aided by cleaner market positioning, but the sudden shock from the BOJ quickly disrupted any chance for meaningful consolidation.
Macro factors continue to dominate price action, yet the underlying market structure has improved markedly compared with recent weeks. Leverage is gradually resetting, basis and funding rates have normalized, and spot liquidity absorbed trading flow relatively well despite the BOJ-driven volatility. While alternative narratives continue to unwind and lower-cap tokens show only brief strength, major cryptocurrencies are expected to trade with greater resilience. Although this month’s extensive macroeconomic calendar will likely determine market direction, the conditions necessary for consolidation are now largely in place.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
