Crypto market analysts are expressing confidence in Bitcoin’s potential for continued recovery, noting that the cryptocurrency has begun to trend upward since hitting a low just above $82,000 on Friday.
Charles Edwards, founder of Capriole Fund, posted to X on Monday, stating that tech stocks and crypto markets experienced declines over the past two weeks due to market volatility regarding expectations for a rate cut. He added that as the market sentiment reverses, Bitcoin is likely to follow suit and move higher.
Analysts at wealth manager Swissblock also indicated that Bitcoin (BTC) has made its first significant move towards establishing a bottom.
“The Risk-Off Signal is dropping sharply, which tells us two things: selling pressure has eased, and the worst of the capitulation is likely behind us, for now.”
They further elaborated that the current week is crucial, emphasizing the need to observe a continued fading of selling pressure. Swissblock pointed out that a second, weaker selling wave often emerges, and when the price holds previous lows, it becomes a highly reliable signal of a bottom.
“That second wave usually marks seller exhaustion and a shift in control back toward the bulls,” the analysts concluded.
TradingView data shows that Bitcoin fell to $80,600 on Coinbase on Friday, marking its lowest point since mid-April. This decline represented a 36% correction from its all-time high of over $126,000 reached in early October.
Fed Rate Cut Odds Increase
Charles Edwards reported that the probability of a Federal Reserve rate cut in December, which had dropped to around 30% last week, has now returned to 70%.
The CME Fed Watch Tool, which monitors probabilities for target interest rates, currently indicates a 69.3% chance of a 0.25 basis point cut at the central bank’s meeting on December 10.
The X account “Global Markets Investor,” a market research entity, shared a chart illustrating the shift in predictions on Polymarket, commenting, “What a difference two days make in market expectations.”
Liquidity Injection Imminent
Market analyst “Sykodelic” suggested on Sunday that it would not be surprising if the Fed announced measures for “reserves management” at its next meeting, which would effectively amount to a liquidity expansion.
The analyst added that the central bank must inject liquidity at some point to avoid financial distress. They stated, “If you are betting on a year-long bear market, you are basically betting that the USA will let itself go broke.”
“If you are betting on a year-long bear market, you are basically betting that the USA will let itself go broke.”
Interest rate cuts and increased liquidity are generally considered bullish for high-risk assets like cryptocurrencies. Historically, periods of quantitative easing have preceded significant rallies in these markets.