Crypto market analysts are confident that Bitcoin's recovery could proceed because the cryptocurrency has began to rise since its low of just over $82,000 on Friday.
Tech stocks and crypto markets have trended lower over the past two weeks “because the market reeled on expectations of a rate cut,” Charles Edwards, founding father of the Capriole Fund, posted on X on Monday.
“As the market recovers, you possibly can expect Bitcoin to maneuver just a little higher,” he added.
Analysts at asset manager Swissblock added that Bitcoin (BTC) has taken its first real step toward bottoming out.
“The risk-off signal is falling sharply, which tells us two things: selling pressure has eased and the worst of capitulation might be behind us for now.”
They added that this week is crucial as “it’s mandatory to make sure that selling pressure continues to subside.”
However, there is usually a second wave of selling that’s weaker than the primary and where the value maintains previous lows, becoming one of the crucial reliable low signals, Swissblock said.
“This second wave often marks the exhaustion of sellers and a shift of control back to the bulls,” the analysts added.
Bitcoin selling pressure is easing. Source: Swissblock
TradingView shows that Bitcoin fell to $80,600 on Coinbase on Friday, its lowest level since mid-April. The decline deepened the correction to 36% from its all-time high above $126,000 in early October.
The likelihood of a rate cut by the Fed is increasing
The probability of a Federal Reserve rate cut in December fell to about 30% last week but has since increased back to 70%, Edwards said.
The CME Fed Watch tool, which tracks goal rate probabilities, currently shows a 69.3% likelihood of a 0.25 basis point cut on 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 forecast reversal chart on Polymarket.
Liquidity injection is imminent
“It really wouldn't surprise me if the Fed announced something along the lines of 'reserve management' at the subsequent meeting… essentially a liquidity expansion,” market analyst Sykodelic said on Sunday.
The central bank can have to inject liquidity in some unspecified time in the future, “otherwise they are going to go bankrupt,” they added.
“Anyone who bets on a year-long bear market is actually betting that the United States will go bankrupt.”
Interest rate cuts and increased liquidity are typically positive for dangerous assets like cryptocurrencies, and former bouts of quantitative easing have been followed by significant rallies.
