Bitcoin (BTC) Price: Is the $90,000 Recovery Real or Just Another Relief Rally?

TLDR

• Bitcoin climbed back above $90,000 on Wednesday after dropping to $81,000 last Friday, its lowest level since April
• The cryptocurrency remains down about 28% from its October all-time high above $126,000
• Analysts warn the recent bounce may not signal a genuine recovery, with potential resistance between $92,000 and $95,000
• Whale wallets holding 10-10,000 BTC have been reducing their holdings for six weeks, a bearish signal
• Experts suggest Bitcoin could retest the $82,000 level or potentially drop below $80,000 before finding stronger support

Bitcoin moved above $90,000 on Wednesday as markets showed renewed interest in risk assets. The price increase came after the cryptocurrency fell to $81,000 last Friday.

The recent climb follows a difficult period for the world’s largest digital asset. Bitcoin hit an all-time high above $126,000 in October before entering a sharp decline.

Stock markets also posted gains this week. The S&P 500 and Nasdaq Composite both aimed for a fourth consecutive day of increases. Investor expectations for a Federal Reserve rate cut in December grew stronger.

The correlation between Bitcoin and the Nasdaq Composite broke down in recent weeks. Bitcoin experienced a much sharper drop compared to the tech-heavy stock index.

Torsten Slok, chief economist for Apollo Management, noted this unusual divergence. The two assets typically move together but have decoupled during the recent market stress.

Rate Cut Expectations and Market Impact

The Federal Reserve’s December meeting looms as a critical event for crypto markets. Markets currently expect a 25 basis point rate cut at the meeting.

However, analysts at 10X Research suggest the rate cut itself may not drive prices higher. They argue that Fed Chair Jerome Powell’s messaging matters more than the mechanical act of cutting rates.

The firm stated that Bitcoin has been highly dependent on Fed communication rather than actual rate changes. A December cut might not prove bullish for Bitcoin prices.

If the Fed decides not to cut rates, the risk of a sharper market selloff could increase. Traders remain sensitive to any shifts in central bank policy direction.

Treasury Spending and Technical Resistance

Some market participants expected increased Treasury General Account spending to boost cryptocurrency prices. This spending was anticipated after the recent US government shutdown ended.

10X Research challenged this assumption using historical data. When the TGA last released approximately $522 billion, Bitcoin initially fell about $14,000 or 15%.

The cryptocurrency only found a bottom after further spending occurred. The lag between spending and price recovery lasted over two months from February to April 2025.

The research firm suggested the relationship between TGA spending and Bitcoin prices may be delayed or more theoretical than causal. If historical patterns repeat, Bitcoin could continue consolidating into late January 2026.

Compass Point analyst Ed Engel hasn’t called a bottom for Bitcoin. He pointed to near-term resistance between $92,000 and $95,000 if the token rallies higher.

Engel described swift relief rallies followed by aggressive selling as a defining trait of bear markets. He expects Bitcoin to retest the $82,000 level and potentially break below $80,000.

Strong support exists in the $65,000 to $70,000 range according to Engel’s analysis. However, he sees increasing risks that Bitcoin could retest the top of this support zone.

Data from Santiment showed retail sentiment turned sharply bearish during the recent decline. The ratio of bullish to bearish comments collapsed as traders declared a bear market had arrived.

Retail commentary mirrored previous cycle bottoms where hope had nearly disappeared. Sentiment extremes often precede sharp reversals in cryptocurrency markets.

Funding rates provided mixed signals about market positioning. Heavy short build-ups can trigger quick rallies once liquidations begin. Current funding levels show elevated bearish positioning but remain below October’s extremes.

The MVRV ratios for Bitcoin remain negative, indicating most traders hold unrealized losses. This situation can sometimes support a small short-term bounce.

Network activity metrics showed concerning trends. Bitcoin addresses created dropped from 3.37 million in mid-December 2023 to 2.21 million currently. Active addresses also declined from 963,900 to 729,200.

Whale wallet activity provided the clearest warning signal. Holders with 10-10,000 BTC have been reducing their aggregate supply for six weeks. These wallets accumulated heavily from early September to early October before the price peaked. Their holdings flatlined on October 8 and have fallen consistently since then.

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