Bitcoin Stabilizes After Four-Week Decline as Fed Rate Cut Odds Surge to 70%

Bitcoin is bouncing back cautiously after enduring its longest losing streak since June 2024—four consecutive weeks in the red. The world’s largest cryptocurrency has now registered its worst quarterly showing since 2018, with losses exceeding 24% so far this period. Yet beneath the surface, signs of accumulation are emerging.

On-Chain Signals Show Hidden Demand

The on-chain spot bid-ask delta at 10% depth has climbed to its second-highest level this year, a metric that’s proven predictive of reversals. Earlier in 2024, a similar surge during the March-April downturn preceded a 64% rally—suggesting large buyers are absorbing the selling pressure at current levels.

Currently trading around $87,400 (up roughly 6% from November 21’s $82,100 low), Bitcoin is displaying cautious recovery momentum. The 24-hour gains of approximately 1.8% may seem modest, but the stabilization itself marks a psychological shift after weeks of consecutive declines.

Federal Reserve Policy Becomes The Key Variable

The rebound accelerated following a dramatic repricing of Federal Reserve expectations. Market participants have revised December rate-cut odds to nearly 70%—a sharp reversal from just 40% the previous week. This policy pivot has become the dominant factor steering Bitcoin sentiment.

Yet analyst Sean Dawson, head of research at options analytics firm Derive, urges restraint: “Pessimism has peaked, but I’d be careful of walking into a bull trap.” He points to structural headwinds—digital asset treasuries trading below net asset value, persistent spot Bitcoin and Ethereum ETF outflows, and lingering inflation concerns that could slow Fed quantitative easing.

Options Market Telegraphs Year-End Caution

The derivatives market is painting a cautious picture. Traders are heavily positioning put options, particularly those expiring in December, concentrated in the $80,000 to $85,000 strike range. This positioning suggests many expect volatility to persist before any sustained recovery takes hold.

Dawson’s year-end outlook remains bearish: “I wouldn’t be surprised if Bitcoin briefly slipped into the mid-to-high $70,000 range before recovering to around $90,000 by year-end, barring a hawkish shift from the Fed.” However, he envisions a potential recovery trajectory reaching $100,000 by Q1 2026—but only after working through current headwinds.

What’s Next: Fed Actions in December

All attention now focuses on two critical Fed announcements: the end of quantitative tightening on December 1 and the rate decision on December 10. These moves will likely dictate Bitcoin’s direction in the weeks ahead, while fear-gauged market sentiment—though still in “extreme fear” territory—has moderately improved following the recent bounce.