Bitcoin, the largest cryptocurrency by market cap, fell to $90,639 early on December 5, 2025, as traders awaited the U.S. Personal Consumption Expenditures (PCE) inflation report and the Federal Reserve’s upcoming policy decision. The cryptocurrency sector shows cautious trading following a volatile week marked by leveraged liquidations and risk aversion. Investor focus centers on the possibility of a Fed rate cut amid strong U.S. labor market data.

Bitcoin Drops Ahead of Fed Decision and Inflation Data

Bitcoin was down 1.4% at $90,639 by 09:02 ET on Friday, retreating from a midweek recovery that followed a low near $84,000. The earlier sell-off was triggered by a wave of risk-off sentiment in crypto markets, accompanied by heavy leveraged liquidations. Despite this volatility, Bitcoin remains on track for a modest weekly gain, supported by improved market sentiment.

U.S. jobless claims fell sharply to their lowest level in over three years last Thursday, reinforcing expectations that the labor market has tightened. This data has increased speculation the Fed may begin easing monetary policy soon through rate cuts. Lower interest rates typically support risk assets such as cryptocurrencies, driving some renewed optimism.

Though the prospect of easing buoyed prices, investors continue to trade cautiously ahead of Friday’s PCE inflation reading — the Fed’s preferred inflation gauge. A softer PCE result would strengthen the argument for a rate cut, while a firm reading could limit expectations. Meanwhile, reports indicate that institutional inflows into Bitcoin have slowed compared to prior quarters, leaving the asset susceptible to rapid price swings driven by derivatives and sentiment shifts.

Bank of America to Advise Clients on Crypto ETFs

In a noteworthy development for cryptocurrency adoption, Bank of America (NYSE: BAC) announced it will permit wealth advisers across its Private Bank, Merrill, and Merrill Edge divisions to recommend regulated crypto exchange-traded products (ETPs) to client portfolios starting January 5, 2026. The guideline allows clients to allocate between 1% and 4% of their portfolios to major Bitcoin ETFs, including products from Bitwise, Fidelity, Grayscale, and BlackRock.

This policy change reflects growing client demand for thematic innovation while emphasizing the inherent risks and volatility associated with digital assets. To support this strategy, Bank of America strategists will begin research coverage of the four leading Bitcoin ETFs to equip advisers with analysis and frameworks consistent with this emerging asset class.

BCA Research: Bitcoin’s Drawdown Marks Speculative Capitulation

According to BCA Research, Bitcoin’s recent price drop represents a “capitulation of excess speculation” rather than a fundamental turning point. The firm points to record liquidations and collapsing sentiment as the key triggers behind the sell-off. Now, with speculative leverage largely washed out, Bitcoin appears set to “re-anchor to macro drivers” such as institutional demand and ongoing ETF inflows.

BCA highlights technical indicators supporting stabilization, including treasury-company premiums moving into discounts and the Fear and Greed Index reverting to 2022 lows. The research group also portrays Bitcoin as “global wealth’s insurance asset,” increasingly valued amid growing demand for alternative reserve assets in an evolving macroeconomic landscape.

Altcoins Follow Bitcoin Lower as Inflation Data Looms

The broader cryptocurrency market tracked Bitcoin’s cautious momentum. Ethereum declined 2.1% to $3,102.14, while XRP dropped nearly 3% to $2.06. Solana, Cardano, and Polygon saw declines between 3% and 4%. Meme tokens such as Dogecoin and $TRUMP fell about 4% and 2.8%, respectively. Market participants remain vigilant ahead of the Fed’s decision and PCE report, which are expected to influence monetary policy and risk sentiment.

Cryptocurrency: Market Outlook

Bitcoin’s sharp move to $90,639 on December 5, 2025, underlines the market’s sensitivity to U.S. economic data and policy signals. The upcoming PCE inflation figures and Fed announcement are set to dictate short-term crypto trends. Institutional interest, exemplified by Bank of America’s crypto ETF recommendations starting next year, points to growing mainstream integration despite ongoing volatility. Investors should monitor these developments closely, as they will shape cryptocurrency market dynamics in the weeks ahead.