The latest US GDP report shows strong US economic growth – but this could be bad news for the crypto market, especially altcoins.
Data released on December 23, 2023, showed that the US economy grew faster than expected in the third quarter, increasing the likelihood that monetary policy will remain tight for longer. While Bitcoin remained stable, crypto markets in general showed warning signs.
US GDP growth exceeds forecasts.
The US economy grew at an annualized rate of 4.3% in the third quarter, significantly higher than the forecast of 3.3% and also exceeding the previous estimate of 3.8%.
At the same time, core PCE inflation rose to 2.9%, higher than the previous level of 2.6% and still above the 2% target set by the US Federal Reserve (Fed).
Real personal spending also increased sharply by 3.5%, far exceeding the forecast of just 2.7%.
Simply put, Americans are still spending heavily and inflationary pressures remain quite high , not enough to reassure policymakers.
Why is rapid growth a problem for crypto?
Stronger-than-expected growth has reduced the need for immediate interest rate cuts.
Combined with recent CPI figures and the still-high inflation expectations from the University of Michigan survey , this GDP report is reinforcing the view that interest rates will remain high for an extended period, potentially until 2026.
For risky assets like crypto, this is crucial because:
- Higher interest rates make investing in cash and bonds more attractive.
- Liquidation in the market is becoming more selective.
- Speculative assets are struggling to attract new Capital .
In this environment, altcoins are often more affected than Bitcoin.
Bitcoin holds its value better than altcoins.
The market's reaction after the GDP release clearly demonstrates this.
Bitcoin remained relatively stable around $87,800 , experiencing only a slight dip during the day and holding above key levels. Bitcoin's market Capital remained above $1.75 trillion, indicating there was no panic selling yet.
However, altcoins experienced a significant decline:
- Ethereum fell by more than 3% today.
- Solana, Cardano, and Dogecoin fell by 3%–6%.
- Mid- and small- Capital Token fell even further and did not recover strongly.
This development further demonstrates Bitcoin's Vai as a liquidation haven during periods of macroeconomic volatility.
Crypto MACD confirms widening downtrend.
Momentum indicators further reinforce those concerns.
According to CoinMarketCap's standardized MACD, 68% of the cryptocurrencies tracked are currently in negative momentum. The market-wide Medium MACD is -0.16, entirely within the downtrend zone.
Most cryptocurrencies with a market Capital under $10 billion also recorded fairly deep negative momentum.
When momentum is weak across the market, money tends to flow back to highly liquidation assets – again benefiting Bitcoin more than altcoins.
The MACD indicator Medium movement in the crypto market. Source: CoinMarketCapWhy are altcoins more vulnerable?
Altcoins rely heavily on cheap liquidation , cash flow from retail investors, and risk appetite. As the US economy experiences strong growth coupled with persistent Dai , all three of these factors are declining.
With American consumers still spending heavily but facing higher costs , the amount of money available for speculative investment could decrease in early 2026.
Meanwhile, institutional investors are becoming increasingly cautious about risks from the Bank of Japan and global interest rate uncertainty. This makes it difficult for altcoins to sustain strong price surges.
What does this mean for the crypto market as we enter 2026?
The GDP report doesn't mean the crypto market will collapse immediately. However, it increases the likelihood of a prolonged sideways movement or further downward pressure, especially for cryptocurrencies other than Bitcoin.
If macroeconomic conditions remain unchanged:
- Bitcoin may continue to trade sideways rather than plummet.
- Altcoins may enter a prolonged bear market.
- The market leadership position may narrow further.
In short, positive US economic data at this point is no longer good news – but a warning sign of liquidation risk.
