Updated on November 25. This post was originally published on November 23.
Bitcoin has seen a modest recovery this week, after a steep decline that had it plummeting toward $80,000. I guess it’s fair to say that there’s growing concern about the possibility of a significant crash in Bitcoin prices.
The recent downturn follows a record high of $126,000 per Bitcoin last month, igniting fears of a $1 trillion collapse in the crypto market.
As President Trump is expected to “open the floodgates,” traders are hurriedly adjusting their strategies amid fluctuating predictions of a potential interest rate cut by the Federal Reserve in December.
Update 11/25: After a steep drop last week, Bitcoin prices have made a notable recovery and are now edging closer to $90,000.
Traders’ optimism grew as expectations for the Federal Reserve to lower interest rates increased following supportive comments from San Francisco Federal Reserve President Mary Daly.
“I’m not sure we can proceed when it comes to the labor market,” Daly mentioned, acknowledging its current fragility and the risk of sudden changes.
At this moment, markets are pricing in an 80% likelihood of a 25 basis point rate cut at the Fed meeting scheduled for December 10, a rise from just 42% a week earlier.
Lukman Otunuga, a senior market analyst, noted that with shifting expectations for interest rates and fragile risk tolerance, this week is set up for volatile movements across various markets, including cryptocurrencies.
Meanwhile, some analysts in the Bitcoin space are feeling hopeful, pointing to reduced sales due to outflows from major holders and exchange-traded funds.
“The market is in a delicate position, but consolidation seems to be finally taking shape,” said Jasper de Meere, an over-the-counter trader.
“We’ve seen big sellers and limited liquidity, leading to institutional adjustments and ETF offloading. This often happens toward year-end as investors trim their crypto holdings for reporting purposes, creating a generally subdued mood.”
The likelihood of a 25 basis point rate cut in December jumped to 70%, a notable increase from just 39% previously. This uptick responds to easing worries that the Federal Reserve might maintain its current rate.
“We still have the potential for adjustments in the target federal funds rate soon to approach a more neutral stance,” New York Fed President Williams indicated, stressing the importance of maintaining inflation at the long-term goal of 2% without jeopardizing employment.
Recently, the tone from Federal Reserve officials shifted after minutes from the last meeting showed significant disagreements, combined with a delayed jobs report that dampened chances for consecutive rate cuts.
Despite a roughly 40% decline in Bitcoin over the last month, traders have remained optimistic this week amid shifting monetary policy.
“Bitcoin’s drop from over $125,000 in October to below $90,000 reflects a mix of pressures that shifted risk sentiment,” stated Nicholas Roberts-Huntley, CEO of Blueprint Finance.
“This economic downturn is being fueled by various factors, including tariff news, a robust dollar, and a wave of forced market liquidations. However, the long-term fundamentals remain intact. This reset might actually pave the way for a healthier recovery. I believe Bitcoin will stabilize and start to rise toward the end of the year, possibly reaching between $95,000 and $110,000. If conditions improve, significant price increases by December could be very possible.”
Bitcoin and cryptocurrency observers have noted that the current price struggles indicate that a new bull market is still on the horizon.
“The bear market really began in December 2024,” remarked Andreas Brecken, founder of trading platform SideShift.ai.
He explained that this trend has become evident in various charts and was somewhat hidden by inflation levels. “As capitulation becomes evident, we’re anticipating a new bull run to begin in early 2026.”
There are suggestions that the Federal Reserve’s planned halt to its liquidity-sapping measures could reignite Bitcoin’s price surge in 2026.
“With the end of quantitative tightening on December 1, the highs seen from August to October might only represent a midpoint,” Robert Lee, head of research at Kiln, noted.
“If Bitcoin strays from its usual cycle, the market might be misjudging both its upside and the risks, possibly marking the first cycle where peaks don’t look like peaks.”
