Market Rebound Driven by Risk Appetite
A significant surge in buying pressure propelled Bitcoin past the $90,000 mark for the first time in nearly a week on Wednesday. According to a Thursday report from Singapore-based trading firm QCP Capital, this uptick was primarily driven by an improvement in overall market risk sentiment rather than a specific catalyst within the cryptocurrency sector itself.
The upward momentum began after Bitcoin experienced an intraday low of $86,400 and has been sustained without major pullbacks. Over the past 24 hours, Bitcoin climbed by 5.3% and is currently trading near the $91,500 level.
Short Liquidations Spike as Bears Caught Off Guard
This bullish turnaround, occurring after several weeks of a sustained downtrend, caught short-sellers by surprise. Data from Coinglass indicates that over the past 24 hours, short liquidations amounted to $241 million. This figure is more than triple the amount of long liquidations recorded during the same period, highlighting the unexpected nature of the price recovery.
Federal Reserve Expectations Influence Market Direction
The broader financial markets have also shown positive signs, with the S&P 500 index confirming a fourth consecutive up-close candlestick on the daily timeframe on Wednesday. This aligns with Bitcoin's bullish retest of the $90,000 level. Market participants have repriced the likelihood of a December rate cut by the Federal Reserve. According to the CME FedWatch tool, there is now an 85% probability that the Fed will implement a quarter-point interest rate cut in December.
QCP's report further noted a slight shift in the balance of Federal Reserve commentary towards easing monetary policy. Four Fed officials have signaled support for rate cuts, two have remained neutral, and six are still opposed to immediate cuts.
Macro Catalysts and Potential Risks
Bitcoin and the wider cryptocurrency market are increasingly acting as a reflection of the broader financial market's risk appetite, with macroeconomic factors playing a critical role in shaping investor sentiment. However, potential risks could reintroduce a bearish outlook and trigger a sell-off. One such risk includes a potential delisting of Strategy from the S&P 500 index.
Options Market Activity Suggests Range-Bound Trading
In the options markets, institutional flows totaling $2 billion were observed this week. Notably, long call condor bets suggest that Bitcoin is likely to remain range-bound in the near term. The long call condor is a strategy with defined risk and limited profit potential, constructed by purchasing four call options with the same expiration date but different strike prices.
The maximum profit for investors employing this strategy is realized if the asset's price stays between the two middle strike prices at expiration. Conversely, maximum losses occur if the price moves outside of that range. QCP analysts observed this activity and noted that Bitcoin is likely to trade within a range, with potential ETF-related distribution possibly hindering rallies beyond the $95,000 level.
Key Support Levels and Analyst Outlook
The $80,000 to $82,000 zone is identified as a key support area following the recent price washout. Analysts maintain a cautiously optimistic outlook as the leading cryptocurrency reclaims the significant $90,000 threshold amid these shifting Federal Reserve expectations and improved market sentiment.