Bitcoin Rebounds Above $90K as Fed Policy Shifts Spark Potential Bull Signals

• Bitcoin price recovery – Surge past $90,000 signals renewed investor confidence amid favorable monetary policy changes.

• Dovish Federal Reserve stance boosts risk assets, encouraging capital rotation into cryptocurrencies for higher yields.

• On-chain indicators like the Bitcoin Futures Market Power at 56.5 and positive Coinbase Premium Index reflect growing spot demand from U.S. investors, with data from CryptoQuant showing sustained positive trends since late November.

Discover why Bitcoin rebounded above $90k amid Fed policy shifts. Explore on-chain metrics signaling bullish momentum and potential for new highs. Stay informed on crypto market trends—subscribe for daily updates.

What Caused Bitcoin’s Rebound Above $90,000?

Bitcoin’s rebound above $90,000 was primarily triggered by the Federal Reserve’s decision to conclude quantitative tightening and market expectations of a 25 basis point interest rate cut at the upcoming FOMC meeting. These developments create a more accommodative monetary environment, making high-growth assets like Bitcoin more attractive to investors seeking better returns. As a result, Bitcoin quickly recovered from its Monday low of $88,000, demonstrating resilience in the face of short-term volatility.

The broader context involves shifting investor sentiment toward risk-on investments. With traditional safe-haven assets offering lower yields in a loosening policy landscape, capital has begun flowing into digital assets. This rotation is evident in increased trading volumes and positive price action across major cryptocurrencies, positioning Bitcoin as the frontrunner in this trend.

Do On-Chain Metrics Indicate a Local Market Bottom for Bitcoin?

On-chain metrics provide deeper insights into Bitcoin’s current market dynamics, offering a data-driven perspective on whether the recent dip to $88,000 marked a local bottom. According to analysis from crypto expert Axel Adler, the Bitcoin Futures Market Power indicator has activated a bullish signal, currently standing at 56.5. This composite metric integrates open interest, funding rates, and taker imbalance to gauge derivative market pressure.

A value above 50 suggests building bullish momentum, with a potential breakthrough above 60 confirming stronger upward trends. Conversely, a decline below 50 could indicate bearish shifts and risk further corrections. Adler’s assessment, based on real-time derivatives data, underscores the metric’s reliability in predicting short-term price directions.

Source: Axel Adler

Complementing this, the Coinbase Premium Index has maintained a positive trajectory since November 28, highlighting robust spot demand from U.S.-based investors. This index measures the price premium of Bitcoin on Coinbase compared to Binance, often serving as a proxy for American institutional interest. Data from CryptoQuant indicates the index’s persistence above zero, which correlates with periods of price appreciation and reduced selling pressure.

Historically, positive readings in this index have preceded rallies of 10-20% within weeks, as U.S. buyers accumulate during perceived dips. This trend aligns with broader market recovery, where institutional inflows via spot ETFs have stabilized Bitcoin’s floor price.

Source: CryptoQuant

Another key indicator, Coin Days Destroyed, monitors the activity of long-term holders by tracking the age of spent coins. Recent data shows minimal spikes over the past ten days, suggesting holders are not aggressively profit-taking or distributing supply. Spikes in this metric often precede tops or bottoms, as they reflect significant movement from dormant wallets.

CryptoQuant reports indicate that quiet periods like this one support accumulation phases, where patient investors build positions without disrupting price stability. For context, during the 2021 bull run, similar low activity levels preceded a 50% surge. Traders should watch for any upticks, as they could signal a local top if combined with overbought conditions.

Source: CryptoQuant

Additionally, recent market analysis reveals that approximately 25% of Bitcoin’s supply has entered unrealized loss territory, primarily held by buyers from the past few months at higher averages. Breaking above $106,200 would require a structural shift, potentially realigning these holders to profitable positions and unlocking further upside. This underwater supply acts as a resistance level but also highlights the opportunity for recovery as macroeconomic tailwinds strengthen.

Frequently Asked Questions

What Factors Are Driving Bitcoin’s Current Price Recovery?

The primary drivers include the Federal Reserve’s pivot away from quantitative tightening and expectations of a 25 basis point rate cut post-FOMC. These policies lower borrowing costs, encouraging investment in high-return assets like Bitcoin. On-chain data from sources like CryptoQuant further supports this, showing increased U.S. spot demand and bullish derivatives signals, which have propelled prices back above $90,000 in under 48 hours.

Will the Federal Reserve’s Rate Cut Lead to New All-Time Highs for Bitcoin?

A rate cut could indeed catalyze new highs for Bitcoin by boosting liquidity and risk appetite, as seen in past cycles where easing policies correlated with 30-50% gains. However, sustained momentum depends on on-chain confirmations like sustained positive Coinbase Premium and low Coin Days Destroyed activity. Investors should monitor FOMC outcomes for clearer directional cues, potentially pushing Bitcoin toward $100,000 if global adoption accelerates.

Key Takeaways

• Bullish On-Chain Signals: The Bitcoin Futures Market Power at 56.5 and positive Coinbase Premium Index indicate strengthening demand, particularly from U.S. institutions, supporting the rebound above $90,000.
• Monetary Policy Influence: End of quantitative tightening and impending rate cuts create favorable conditions for risk assets, with historical data showing crypto inflows during such periods.
• Holder Behavior Monitoring: Low Coin Days Destroyed suggests long-term holders are accumulating, but watch for spikes that could signal profit-taking; aim for a break above $106,200 to resolve unrealized losses for 25% of supply.

Conclusion

Bitcoin’s rebound above $90,000 underscores the interplay between macroeconomic policy shifts and on-chain metrics, with the Federal Reserve’s dovish stance enhancing Bitcoin price recovery prospects. Indicators like the Coinbase Premium Index and Coin Days Destroyed point to sustained demand and holder patience, though underwater supply poses near-term challenges. As markets await FOMC clarity, investors may see accelerated capital flows, potentially setting the stage for Bitcoin to challenge previous highs—position yourself strategically for the evolving crypto landscape.