Bitcoin is currently trading at a crucial technical level that must be defended by bulls to avert significant price declines, according to cryptocurrency analyst "Daan Crypto Trades." This critical zone is identified as the 0.382 Fibonacci retracement level, a significant area that historically acts as both support and resistance during market cycles.
Daan Crypto Trades emphasized the importance of this level, stating, "I think this is a key area for the bulls to defend." He further cautioned that a breach below this support could lead to a substantial drop in Bitcoin (BTC) prices, potentially revisiting the lows seen in April, which were around the $76,000 mark. He elaborated, "It’s also pretty much the last major support before testing the April lows again, which would break this high time frame market structure."
Over the weekend, Bitcoin experienced a sharp decline, characterized by a liquidation of leveraged positions on both the long and short sides. The price briefly dipped below $88,000 before quickly recovering and surpassing $91,500. "Bull Theory," a market commentator, attributed this volatility to market manipulation during periods of low liquidity. They commented, "This is another example of manipulation on the low-liquidity weekend to wipe out both leveraged longs and shorts."
All Eyes on the Federal Reserve Meeting This Week
The upcoming monetary policy meeting of the Federal Open Market Committee (FOMC) on Tuesday and Wednesday is a major focus for the financial markets. The conclusion of the meeting is expected to bring a decision on interest rates, with a 0.25% cut widely anticipated by market participants.
Since the Federal Reserve's October rate cut, crypto markets have seen a loss of momentum. Markus Thielen, head of 10x Research, noted in a communication to Cointelegraph that Fed Chair Jerome Powell had indicated a "non-linear, data-dependent easing path rather than a clear-cutting cycle." The market is now anticipating a 25-basis-point reduction on December 10th, followed by a cautious outlook from the Fed. Thielen suggested this would be similar to the "hawkish execution" observed in October and could maintain mild downward pressure on the market towards the end of the year.
"With volumes already depressed and ETF flows negative, upside participation remains thin while the $70,000–$100,000 BTC range holds and implied volatility continues to compress, leaving downside risk more pronounced than upside."
Fed Outlook Statement Will Be Key
Henrik Andersson, from Apollo Capital, shared a similar perspective, telling Cointelegraph that the anticipated Fed rate cut this week has already been factored into market pricing. However, he highlighted that the crucial element for determining future market direction will be the Fed's outlook statement. Despite the current caution, Andersson expressed optimism for the upcoming year.
"However, with the Fed chairman being replaced in May next year, we will likely get more interest rate cuts in 2026, which should be supportive for risk assets, including crypto."
Nick Ruck, Director of LVRG Research, concurred, adding that in addition to the Fed meeting, upcoming economic data releases concerning jobs and inflation could significantly influence market movements. If these data points align with expectations for continued monetary easing, they could "unlock renewed liquidity inflows and propel a broader market rebound."