Crypto stabilises: BTC holds 87k as Fed cut bets return

Bitcoin is hovering around 87k, having recovered 4% this week amid cautious signs that a local bottom could be in after the worst month for crypto since 2022. Altcoins are also trading higher over the past 24 hours, with Ethereum up 3.4%, Ripple up 7%, and Solana up 5%.  

The total cryptocurrency market capitalisation is up 2% to $3 trillion from a low of $2.82 trillion last week, but it is still some way off October’s record $4.2 trillion level. Sentiment analysis shows that the market is still gripped by Extreme Fear, but has improved from the record low level last week. 

Bitcoin, along with other risk assets, has staged a modest recovery in recent sessions amid increasing conviction that the Federal Reserve could cut interest rates again next month. 

Federal Reserve Governor Christopher Waller Said yesterday that labour market conditions had become his primary concern and he supported a rate cut in December. His comments echoed those of New York Fed President John Williams, who on Friday shifted market expectations for a December rate cut from 30% to 77%.  

The reversal sparked gains across risk assets, though the recovery in crypto has lagged those in the tech sector, suggesting caution remains towards crypto following this month's 20% declines. 

The market could remain jittery between now and the December 9-10 FOMC meeting as investors continue to weigh up the likelihood of a December rate cut. Attention today will be on a US data drop, including ADP 4-week average payrolls, US retail sales, consumer confidence, pending home sales, and durable goods, all delayed by the US government shutdown. The data will provide insight into how the economy is holding up. Weak data could fuel expectations of a Fed rate cut. 

BTC ETF outflows continue, DATs accumulate 

While the fundamental backdrop shows signs of improving, institutional demand remains weak. According to SoSoValue, BTC ETFs booked $151 million in net outflows yesterday, extending four consecutive weeks of outflows. Persistent outflow could push the BTC price lower. 

 However, Bitcoin Digital Asset Treasuries have been buying the dip. DATS have been aggressively buying in November as the price dropped 20%, adding 18,700 BTC this month, according to Sentora data. 

This buying spree pushes the treasury held Bitcoin to 1,860,977 BTC. This means that around 9% of BTC’s circulating supply is locked away in corporate, institutional, and government balance sheets. 

Mid-sized wallets vs retail and large whales 

According to CryptoQuant data, mid-sized wallets holding between 10-100 BTC and 100-1000BTC have also been quietly accumulating. Selling pressure from large whales and retail investors (0-1BTC and 1-10BTC) continues. However, if accumulation by mid-sized wallets offsets disbursements from the other cohorts, this could help sustain a local bottom. 

For BTC to stage a solid recovery, large whales and institutions must once again become net buyers. 

BTC technical analysis 

After being rejected at 106.5k on November 11, BTC/USDT rebounded, dropping 20% to support at 80.5k before recovering higher, bringing the RSI out of oversold territory. 

The hammer candlestick pattern on Friday could point to a bullish reversal. Buyers would need to extend the recovery above the falling trendline and 90k, the round number towards 94.3k, 61.8% Fib retracement level. It would take a rise above 100k for the price to be on more stable ground. 

Failure to extend the recovery could see sellers retest support at 85k, the 78.6% Fib retracement of the 74.4k low and the 126.2k high.  

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