Bitcoin has experienced a significant rebound this week, surging nearly 8% in a single day. Analysts are interpreting this momentum as a potential indication that the market may have reached a local bottom after a turbulent period.
According to a report from Bitfinex, the recent resurgence is attributed to “seller exhaustion.” This phenomenon follows a substantial deleveraging event in which approximately $19 billion was wiped from the market, creating a leaner leverage structure and decreasing the likelihood of mass liquidations. Bitfinex noted that the combination of extreme deleveraging, capitulation among short-term holders, and initial signs of seller exhaustion have generated conditions conducive to a stabilization phase alongside a relief bounce.
Following these insights, Bitcoin’s price rallied sharply, briefly approaching $94,000 before settling around $91,440, as reported by CoinMarketCap. The exchange emphasized that the market is now based on less leverage, which should help mitigate price volatility. This reduction in excessive risk comes after a sharp decline in October, when Bitcoin fell to lows near $82,000, primarily due to aggressive liquidation of over-leveraged positions.
The recent price movements have sparked discussions about the relevance of Bitcoin’s historically recognized four-year cycle. While some analysts suggest that the peak may have already occurred in October, when Bitcoin approached record highs of approximately $125,100, the current rebound challenges this narrative. Seasonal patterns provide little clarification, as December has historically been a quieter month for Bitcoin, typically yielding an average gain of 4.69% since 2013. However, anomalies have emerged this year; November, often seen as a strong month for Bitcoin, ended with losses exceeding 17%.
Despite the ongoing debate regarding market cycles, some analysts remain optimistic. Market commentator PlanC noted on social media that this Bitcoin cycle is distinctive from previous cycles, while trader Quinten Francois expressed that the asset is now “closer to the bottom than to the top.”
In parallel developments, ARK Invest CEO Cathie Wood has predicted a turnaround in liquidity for both cryptocurrency and AI markets. Wood expects this liquidity squeeze to reverse within weeks, driven by anticipated shifts in Federal Reserve policy. Her firm has been aggressively purchasing crypto equities during this downturn, investing over $93 million in a single day into undervalued digital asset stocks. Wood highlighted three temporary liquidity constraints she believes will quickly ease due to Federal Reserve actions and renewed government spending, including an expected end to quantitative tightening during the Fed’s upcoming meeting.
As the crypto landscape continues to unfold, both analysts and investors are closely monitoring these developments, which could signify a pivotal moment for Bitcoin and the broader market.
