Traders and investors are closely monitoring the upcoming Federal Reserve meeting in December for potential insights into monetary policy and its implications for market conditions. Amidst this anticipation, Bitcoin has recently experienced notable fluctuations, plunging to a low of $99,000 on Coinbase, marking its lowest point since May, before rebounding slightly to $102,000 the following morning. This series of movements has led to a significant correction, erasing nearly 20% from Bitcoin’s all-time high of $126,000 achieved earlier in October. The total capitalization of the cryptocurrency market has also dropped by approximately 20%, currently resting just under $3.5 trillion.
Market sentiment appears subdued, particularly among venture capital funds and trading firms. Annabelle Huang, founder of blockchain infrastructure firm Altius, commented on the current landscape, suggesting that the likelihood of a rate cut by the Fed has diminished compared to previous expectations. This cautious outlook is compounded by factors such as a prolonged U.S. government shutdown and stagnant liquidity conditions which are fostering a broader atmosphere of risk aversion among traders.
Current projections regarding the Fed’s December meeting, as indicated by the CME FedWatch Tool, show a 74% chance of a rate cut. However, last week’s cautious language from the Fed implies that policymakers may opt to pause their decisions and evaluate incoming economic indicators, potentially prolonging volatility across various risk assets.
In the wake of this uncertainty, some analysts are emphasizing the importance of Bitcoin’s performance around the $100,000 mark as a critical support level. Mike McGlone, a senior commodity strategist at Bloomberg Intelligence, warned that failing to hold this support could lead to significant market upheaval, potentially reflecting the historical performance disparities between gold and crude oil.
The outflow of investments continues to affect Bitcoin’s value, with data from DefiLlama reporting $566 million in sales of spot Bitcoin exchange-traded funds. Additionally, significant transactions are being observed, including a major transfer by Marathon Digital of $236 million in Bitcoin to institutional exchanges such as FalconX, TwoPrime, Galaxy Digital, and Coinbase Prime. Marathon Digital has yet to provide any comments regarding this transfer.
In the near term, Lacie Zhang, a research analyst at Bitget Wallet, predicts that Bitcoin is likely to fluctuate between $94,000 and $118,000. She attributes the lower limit to a healthy retracement zone amid reduced inflows into ETFs. If Bitcoin can maintain its position above key resistance levels while volatility decreases, there is potential for renewed investor confidence.
Conversely, some experts view the ongoing correction as a sign of optimism, suggesting it represents a generational shift in Bitcoin ownership. Kyle Chassé, founder of venture capital firm MV Global, noted that many of the earliest Bitcoin wallets are coming back to life and selling for the first time, indicating that long-term holders are taking profits and paving the way for institutional and sovereign investors to enter the market.
As of the latest trading session, Bitcoin has decreased by 2.3% over the past 24 hours, priced at approximately $101,600. Ethereum has also seen a decline, down 4.6% and trading at around $3,300. The atmosphere remains uncertain, and traders continue to watch for signals that could influence market direction in the weeks ahead.
