Bitcoin recovers above 100k, what’s driving BTC, and is a rise above 109k coming?

Bitcoin has recovered from yesterday's brief spike below 100k, which saw it lose $130 billion in market cap, and it is currently trading at 103K. 

During Monday’s DeepSeek tech stock rout, Bitcoin fell to a low of 97,750 as it tracked the tech sector lower. However, its swift recovery from a key technical support is encouraging. Traders bought the dip, helping Bitcoin rise over 5.7% from its low point, outperforming the Nasdaq and the S&P 500. 

It remains to be seen whether DeepSeek’s cheaper, more efficient AI model will disrupt the sector. Reports today raise some questions over its claims. Nvidia is trading 5% higher pre-market, suggesting that yesterday’s selloff may have been overdone. Perhaps of more interest to Bitcoin buyers was DeepSeek’s forecast that Bitcoin could reach a peak of 500k. However, as a base case, the AI model sees the price trading between 100k and 150k in 2025. 

Arizona moves a step closer to a Bitcoin strategic reserve 

Arizona taking a step towards being able to invest in crypto is adding to the bullish recovery mood. The Arizona Senate Finance Committee approved the Arizona Strategic Bitcoin Reserve Act, moving close to a stage where Arizona could set up its Bitcoin reserve. Legislation will be submitted to the Senate Rules Committee for debate and sent to the House of Representatives for consideration.  

Should it pass these steps, it would become the first state to use public funds to invest in Bitcoin. Multiple other states, including taxes, Pennsylvania, no higher Nicola Houma, have introduced similar bills to establish crypto reserves. Should multiple states approve bitcoin strategic reserves, a national strategic reserve could be more likely. 

These latest developments come after Trump signed an executive order and set up a Presidential Working Group on Digital Asset Markets, which will investigate the creation of a national strategic bitcoin reserve. Optimism surrounding a bitcoin reserve helped drive the bitcoin 50% higher since November’s election. 

How might the FOMC meeting impact Bitcoin? 

Attention is now turning to the 2-day FOMC meeting, which kicks off today. The Fed is widely expected to keep interest rates unchanged at 4.25 to 4.5% at the meeting's conclusion tomorrow. Given that the market is pricing in this outcome, attention will be firmly on comments from Federal Reserve chair Jerome Powell and the outlook for rate cuts across the year.  

While the Goldilocks scenario showing resilient growth supports a pause from the Fed, cooling underlying inflation points to further cuts across the year.  A pause will also give the Fed time to assess Trump's policies. A cautious-sounding Fed may pull BTC and other risk assets lower. However, BTC could see a leg higher should the Fed be encouraged by cooling core CPI data. 

BTC/USD technical analysis 

After reaching a record high of 109.5k last week, BTC/USD briefly spiked below 100k yesterday; before finding support on the 50 SMA and rebounding higher.  

The long lower wick on yesterday’s candle points to weak selling demand at the lower levels, with dip buyers helping the price recover above 100k to 103k. The RSI is above 50 and pointing higher, suggesting that momentum is returning. 

Buyers will look to rise above 105K to extend gains to 109.5k and move towards 125k 

Sellers will need to break below 100k and the 50 SMA at 98.3k. A break below here opens the door to a deeper sell-off towards 90k. 

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