Bitcoin (BTC) Price: Recovery Underway as Rate Cut Expectations Surge

TLDR

• Bitcoin recovered from a low near $82,000 on Friday, with analysts noting reduced selling pressure and signs of bottoming
• Federal Reserve rate cut odds jumped back to 70% for December after falling to 30% last week
• Bitcoin ETFs recorded $1.22 billion in outflows last week, totaling $4.34 billion over four consecutive weeks
• Analysts say the worst capitulation may be over but warn a second, weaker selling wave could still occur
• Bitcoin dropped 36% from its October all-time high above $126,000, hitting its lowest level since mid-April

Bitcoin started moving higher after touching just above $82,000 on Friday. The cryptocurrency fell to $80,600 on Coinbase during the drop. This marked its lowest price since mid-April.

The decline represented a 36% correction from Bitcoin’s all-time high above $126,000 reached in early October. Tech stocks and crypto markets faced pressure over the past two weeks due to changing expectations about Federal Reserve policy.

Charles Edwards from Capriole Fund said market flip-flopping on rate cut expectations caused the selloff. He expects Bitcoin to move higher as the market adjusts its outlook.

Analysts at Swissblock said Bitcoin has taken its first real step toward forming a bottom. Their Risk-Off Signal dropped sharply, indicating selling pressure has eased. They believe the worst of the capitulation is likely over for now.

This week remains critical for Bitcoin’s recovery. Analysts need to see selling pressure continue to fade.

Signs of Market Stabilization

Swissblock warned that a second selling wave often occurs after the initial drop. This wave is typically weaker than the first. Price usually holds the previous lows during this phase.

Bitcoin ETFs recorded $1.22 billion in net outflows for the week ending November 21. This extended their losing streak to four consecutive weeks. Cumulative outflows over this period reached $4.34 billion.

Trading volumes across U.S. spot Bitcoin ETFs surged past $40 billion last week. These record volumes occurred during the same period as the heavy outflows. Analysts describe this activity as “institutional capitulation.”

Federal Reserve Policy Expectations Shift

The probability of a Federal Reserve rate cut in December changed dramatically. Last week, the odds fell to around 30%. They have since returned to 70%.

The CME Fed Watch Tool currently shows 69.3% odds of a 0.25 basis point cut at the December 10 meeting. Market predictions on Polymarket showed the same flip in expectations over just two days.

Market analyst Sykodelic said he wouldn’t be surprised to see the Fed announce liquidity expansion measures at the next meeting. The central bank will eventually need to inject liquidity into the system.

Interest rate cuts and increased liquidity typically benefit high-risk assets like cryptocurrencies. Previous periods of quantitative easing have been followed by market rallies.

Bitcoin last traded 1.4% higher at $87,050 by 01:25 ET on Monday. The cryptocurrency recovered back above $90,000 after dropping to $88,610 in the previous 24 hours.

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