Bitcoin climb to continue as selling pressure eases: Analysts

Crypto market analysts are confident that Bitcoin’s recovery could continue as the cryptocurrency has begun to move higher since its bottom at just above $82,000 on Friday.

Tech stocks and crypto markets dumped over the past two weeks “because of the market flip-flopping on expectations for a rate cut,” Capriole Fund founder Charles Edwards posted to X on Monday.

“As the market reverts, expect it will carry Bitcoin somewhat higher,” he added.

Analysts at wealth manager Swissblock added that Bitcoin has taken its first real step toward forming 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 added that this week is critical, as it needs “to see selling pressure continue to fade.” 

However, there is often a second selling wave, which is weaker than the first and with price holding the previous lows, which becomes one of the most reliable bottom signals, Swissblock said.

“That second wave usually marks seller exhaustion and a shift in control back toward the bulls,” the analysts added. 

TradingView shows Bitcoin dropped to $80,600 on Coinbase on Friday, its lowest level since mid-April. The fall took the depth of its correction from its early October all-time high above $126,000 to 36%.

Fed rate cut odds increase 

The probability of a Federal Reserve rate cut in December fell to around 30% last week, but it has since returned to 70%, said Edwards.

The CME Fed Watch Tool, which tracks target rate probabilities, currently shows 69.3% odds of a 0.25 basis point cut at the central bank’s Dec. 10 meeting.  

“What a difference two days make in market expectations,” said market research X account “Global Markets Investor,” who shared a chart of the prediction flipping on Polymarket.

Liquidity injection imminent 

“I really would not be surprised to see the Fed announce something at the next meeting in the way of ‘reserves management’ … essentially, liquidity expansion,” said market analyst “Sykodelic” on Sunday.

The central bank has to inject liquidity at some point, “otherwise they go bankrupt,” they added.

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 typically bullish for high-risk assets, such as cryptocurrencies, and previous periods of quantitative easing have been followed by significant rallies.