Bitcoin, XRP Fall. 2 Big Red Flags for a Crypto Comeback.

Bitcoin’s rebound stalled on Wednesday, ahead of the holiday period. (Romain Costaseca/Hans Lucas/AFP via Getty Images)

Key Points

• Bitcoin traded at $86,961, down 0.5% over 24 hours, and 31% below its early October record high of $126,273.
• Cryptocurrencies have largely traded sideways this week, despite a 3.4% rise in the Nasdaq Composite.
• Other cryptocurrencies also struggled, with XRP down 1.2% to $2.17 and Dogecoin up 0.9%.

The price of Bitcoin edged lower early Wednesday as the cryptocurrency rebound stalled ahead of the holiday period.

The world’s largest cryptocurrency was trading at $86,961 early in the day, down around 0.5% over the past 24 hours, according to CoinDesk data. It recovered from lows of around $82,000 at the end of last week but remains 31% off its record high of $126,273 reached in early October.

The recent slump has offered investors “a chance to reenter at compelling levels,” Joel Kruger, LMAX Group strategist said. “With sentiment recently hitting extreme lows—a historically strong contrarian signal—the current pullback appears less like a warning sign and more like an opportunity,” he added.

But cryptocurrencies have largely traded sideways since the start of the week, despite risk assets enjoying a boost over the same period. The technology-heavy Nasdaq Composite has climbed 3.4% this week. Such a move would typically support cryptos, so the fact it hasn’t is a concern.

A key reason for the tech rally this week is increased confidence that the Federal Reserve will cut interest rates at its December meeting. Again, that tends to boost digital assets.

Other cryptos were also struggling to gain ground. Popular altcoin XRP was down 1.2% at $2.17, while Ethereum edged 0.5% higher to $2,910.

Even the launch of GrayScale’s Dogecoin Trust exchange-traded fund has failed to significantly boost the token, which was 0.9% higher Wednesday.

Write to Callum Keown at callum.keown@dowjones.com