Bitcoin edged slightly higher on Wednesday, but was still on track to end the year in negative territory, weighed down by sharp fourth-quarter losses amid weak liquidity and fading risk appetite, which continued to cast a shadow over the broader cryptocurrency market.

The world’s largest cryptocurrency was trading up 1.3% at $89,010 as of 06:56 a.m. US Eastern Time (11:56 GMT).

Bitcoin was heading for an annual decline of around 5%, with losses in the fourth quarter alone exceeding 22%. The cryptocurrency had reached a record high above $126,000 in October.

The sharp late-year pullback erased earlier gains and left Bitcoin struggling to hold key support levels, as investors retreated from higher-risk assets.

Bitcoin heads for annual loss after 22% drop in Q4

Bitcoin’s weakness toward the end of 2025 followed a strong rally in the fourth quarter of 2024, when prices surged after Donald Trump was elected US president.

At the time, markets had priced in expectations that his administration would adopt a more supportive regulatory stance toward digital assets, boosting sentiment across the crypto sector and driving strong investment inflows.

However, the optimism that carried into early 2025 proved difficult to sustain. After posting solid gains in the first half of the year, Bitcoin began to lose momentum from mid-2025 onward, as global financial conditions tightened and investor caution increased.

Recovery attempts in December failed to gain traction, despite seasonal expectations for a so-called “Santa Claus rally.” Bitcoin repeatedly struggled to reclaim higher price levels during the month, with each upward move met by renewed selling, as traders opted to take profits or scale back positions ahead of year-end.

Despite continued institutional interest in digital assets, including ongoing activity in spot Bitcoin exchange-traded funds, inflows were not sufficient to offset the broader risk-off mood dominating global markets.

Cryptocurrency prices today: altcoins under pressure, annual losses in focus

Most alternative cryptocurrencies continued to trade in narrow ranges on Wednesday and were on course to post annual losses.

Ethereum, the world’s second-largest cryptocurrency, rose 0.8% to $2,996.10, but was still heading for an annual decline of around 10%.

XRP, the third-largest cryptocurrency globally, also edged slightly higher to $1.87, but was similarly on track to record an annual loss of about 10%.

Oil prices were largely steady on Wednesday, but remain on track to post losses exceeding 15% over the course of 2025, as growing concerns over oversupply weighed on the market in a year marked by wars, higher tariffs, rising production from the OPEC+ alliance, and sanctions on Russia, Iran, and Venezuela.

Brent crude futures are down about 18%, marking their largest percentage annual decline since 2020 and putting them on course for a third consecutive yearly loss — the longest losing streak in their history. US West Texas Intermediate crude is also heading for an annual decline of around 19%.

Jason Ying, senior commodities analyst at BNP Paribas, expects Brent prices to fall to $55 per barrel in the first quarter before recovering to around $60 per barrel for the rest of 2026, as supply growth normalizes while demand remains steady.

“The reason we are more bearish on the market in the near term is that we believe US shale producers have been able to hedge at relatively high price levels,” he said.

“As a result, supply from US shale producers is likely to be more stable and less sensitive to price movements,” he added.

Data from London Stock Exchange Group (LSEG) showed that average prices in 2025 for both benchmarks were the lowest since 2020. Brent crude futures rose 9 cents to $61.42 per barrel at 10:30 GMT, while WTI traded at $58.05 per barrel, up 10 cents.

Two market sources, citing data from the American Petroleum Institute released on Tuesday, said US crude and fuel inventories rose last week. The Energy Information Administration is scheduled to release its official data later on Wednesday.

Prices cool after a strong start

Oil markets had a strong start to 2025, when former US president Joe Biden ended his term by imposing tougher sanctions on Russia, disrupting supplies to major buyers China and India.

The war in Ukraine also intensified, after Ukrainian drones damaged Russian energy infrastructure and disrupted oil exports from Kazakhstan. Meanwhile, the 12-day conflict between Iran and Israel in June threatened shipping through the Strait of Hormuz — a key route for seaborne global oil flows — pushing prices higher.

Geopolitical tensions escalated further in recent weeks amid a crisis involving major OPEC producers Saudi Arabia and the UAE over Yemen, alongside orders by US president Donald Trump to impose a blockade on Venezuelan oil exports and his threats of another strike on Iran.

However, prices later retreated after the OPEC+ alliance accelerated production increases this year, while concerns grew over the impact of US tariffs on global economic growth and fuel demand.

OPEC+

The Organization of the Petroleum Exporting Countries and its allies have paused oil production increases in the first quarter of 2026, after adding around 2.9 million barrels per day to the market since April. The next OPEC+ meeting is scheduled for January 4.

Most analysts expect supply to exceed demand next year, with estimates ranging from 3.84 million barrels per day according to the International Energy Agency, to around 2 million barrels per day based on estimates from Goldman Sachs.

Martin Rats, global oil strategist at Morgan Stanley, said: “If prices were to fall sharply, I could see some production cuts from OPEC+.”

“But prices would likely need to fall much further than current levels — perhaps into the low $50s,” he added.

“If prices remain around current levels, then after the pause in the first quarter, they are likely to continue unwinding these cuts gradually,” he said.

Meanwhile, John Driscoll, managing director at consultancy JTD Energy, said geopolitical risks are likely to continue supporting oil prices, even though fundamentals point to a supply surplus.

“Everyone says things will get weaker in 2026 and beyond,” he said, adding: “But I do not underestimate geopolitics, and the Trump factor will remain significant, because he wants to be involved in everything.”

The US dollar edged slightly higher on Wednesday, but remained on track to post its largest annual decline since 2017, amid interest rate cuts, fiscal concerns, and volatile US trade policy under President Donald Trump — factors that dominated currency markets throughout 2025.

These dynamics are likely to persist into 2026, suggesting that the dollar’s weak performance could extend and continue to influence the behavior of its peers, including the euro and the British pound, both of which recorded strong gains this year.

Dollar sentiment was further weighed down by concerns over the independence of the Federal Reserve under the Trump administration. Trump said he plans to announce his choice for the next Fed chair sometime in January, to replace Jerome Powell when his term ends in May. Powell has faced repeated criticism from the president.

This backdrop has kept “sell-the-dollar” trades firmly entrenched, with traders holding net short positions since April, according to data from the US Commodity Futures Trading Commission.

The euro slipped 0.1% to $1.1736, while sterling traded at $1.3434 on the final trading day of the year. Both currencies are on track to post their largest annual gains against the dollar in eight years.

The dollar index, which measures the US currency against six major peers, stood at 98.35, adding to gains recorded on Tuesday. Even so, the index is down 9.4% in 2025, while the euro has risen 13.4% and the pound has gained 7.5%.

Other European currencies also posted strong advances this year, with the Swiss franc up 14% and the Swedish krona surging 20%.

Prashant Newnaha, Asia-Pacific rates strategist at TD Securities, said the bearish outlook for the dollar in 2026 remains widely supported, with expectations centered on “selling the dollar against the euro and the Australian dollar.”

The dollar received some support in the previous session after minutes from the Federal Reserve’s December meeting revealed deep divisions among policymakers as they cut interest rates earlier this month.

Economists at Barclays noted that some policymakers believed it would be appropriate to keep rates unchanged “for some time.”

In a note, they said: “While this certainly does not preclude the committee from cutting rates in January, it suggests limited support for another cut unless there is further deterioration in labor market conditions.”

Traders are currently pricing in two rate cuts in 2026, despite the central bank itself projecting only one additional cut next year.

Dollar weakness in 2025 helped propel many major and emerging market currencies to strong annual gains.

The Chinese yuan broke the key psychological level of seven per dollar on Tuesday for the first time in two and a half years, defying weaker guidance from the central bank. The yuan is up 4.4% for the year, marking its strongest annual performance since 2020.

The fragile yen stands out

The Japanese yen is among the few currencies that failed to benefit from dollar weakness in 2025, remaining broadly flat despite the Bank of Japan raising interest rates twice this year — once in January and again earlier this month.

On Wednesday, the yen eased slightly to 156.61 per dollar, hovering near levels that have triggered concerns about official intervention, alongside strong warning rhetoric from Tokyo.

Investors have been disappointed by the slow and cautious pace of policy tightening, with the large long-yen position seen in April fully unwound by year-end.

Looking ahead to 2026, MUFG strategists said conditions may align for a pullback that pushes dollar/yen lower, adding: “The lower US Treasury yields fall, the greater the chance for the yen to regain its safe-haven status.”

Meanwhile, the risk-sensitive Australian dollar traded at $0.66965 and is set to post a gain of more than 8% for the year, its best annual performance since 2020. The New Zealand dollar edged slightly lower to $0.57875, but was on track for a 3.4% annual gain, ending a four-year losing streak.

Gold prices fell in European trading on Wednesday, resuming their losses that had briefly paused in the previous session, and touching a two-week low, as renewed correction and profit-taking activity emerged in the final trading sessions of the year, under pressure from a stronger US dollar against a basket of global currencies.

Despite the modest pullback at year-end, the precious metal gold is preparing to post its strongest annual performance since 1979, supported by exceptional and record-breaking demand for gold bullion as one of the most prominent safe-haven assets, amid geopolitical turmoil and global economic shifts that made gold the preferred vehicle for wealth protection in 2025.

Price Overview

• Gold prices today: gold fell by 1.5% to $4,274.23, the lowest level since December 16, from an opening level of $4,339.10, after posting an intraday high at $4,373.24.

• At Tuesday’s settlement, the precious metal edged up 0.2%, after suffering a sharp 4.45% decline on Monday, its largest daily loss since last October, driven by accelerated correction and profit-taking from the all-time high of $4,550.04 per ounce.

US Dollar

The US dollar index rose by more than 0.2% on Wednesday, extending its gains for a second consecutive session and reaching a one-week high at 98.44 points, reflecting continued strength in the US currency against a basket of major and secondary currencies.

According to the minutes of the Federal Reserve’s latest meeting, held on December 9–10 and released on Tuesday, the US central bank agreed to cut interest rates following an in-depth discussion of the risks facing the US economy.

The minutes revealed that the decision to cut rates by 25 basis points to a 3.75% range, the lowest since 2022, faced significant opposition, with nine members voting in favor and three dissenting — the largest number of dissents since 2019.

The minutes also indicated a preference for caution in upcoming meetings, as some participants suggested that keeping rates unchanged “for some time” after the December cut would be the most appropriate option.

The Federal Open Market Committee projected only one additional interest rate cut throughout 2026, signaling a more cautious and hawkish approach compared with earlier expectations.

US Interest Rates

• According to the CME FedWatch Tool, market pricing for keeping US interest rates unchanged at the January 2026 meeting stands at 84%, while the probability of a 25-basis-point cut is priced at 16%.

• Investors are currently pricing in two US rate cuts over the course of next year, while Federal Reserve projections point to only one 25-basis-point cut.

• To reprice these expectations, investors are closely monitoring upcoming US economic data, along with comments from Federal Reserve officials.

Gold Outlook

Independent analyst Ross Norman said gold is experiencing sharp price swings driven by profit-taking as well as the opening of new positions. He added that higher margin requirements at the Chicago Mercantile Exchange have likely curbed the large upside moves that had been expected in precious metals.

Norman also noted that tariffs, the desire to build domestic inventories, and fragile supply chains have all highlighted the strategic importance of certain key metals.

He added that in 2026, the repercussions of these factors will become clearer, not only through higher prices as countries compete to build strategic stockpiles, but also through alternative mechanisms to secure essential commodities.

Annual Performance

Over the course of 2025, which officially ends with today’s settlement, the precious metal gold is up by more than 64%, on track to achieve its third consecutive annual gain and its largest annual increase since 1979.

Drivers Behind This Historic Outperformance

• Central bank buying: the most significant factor was the continued accumulation of gold reserves by central banks worldwide at unprecedented record levels. This shift toward de-dollarization and diversification away from fiat currencies created strong and persistent structural demand, largely insulated from short-term speculative fluctuations.

• Global monetary environment: gold benefited strongly from the shift by major central banks, led by the Federal Reserve, toward interest rate cuts. As gold yields no income, lower rates reduce the opportunity cost of holding it, prompting large investment funds to redirect substantial liquidity from bonds into the yellow metal.

• Escalating geopolitical tensions: amid political instability and conflicts throughout 2025, gold’s role as a trusted global safe haven intensified, with investors and institutions turning to it as protection against wars, economic sanctions, and sudden financial market volatility.

• Inflation hedging: with persistent inflationary pressures and rising global sovereign debt, fiat currencies lost part of their purchasing power, driving individuals and institutions to increase demand for physical gold bars and coins as a tangible store of value and a safeguard against potential economic breakdowns.

• Physical scarcity and production constraints: the mining sector faced difficulties expanding global output in 2025 due to depletion at major mines and rising extraction costs. This relatively stable supply against surging demand provided additional fuel for gold prices to break above historic levels beyond $4,000 per ounce.

• Weakness of the US dollar: driven by Federal Reserve rate cuts, growing concerns about financial stability in the United States, volatile trade policies under Donald Trump, and rising doubts about the Federal Reserve’s independence under the Trump administration.

SPDR Gold Trust

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged on Tuesday, keeping total holdings at 1,071.99 metric tons, the highest level since June 21, 2022.