Death cross appears, and the Federal Reserve's hawkish rate cut outlook casts a shadow; Bitcoin breaking through $90,000 becomes a challenge

Red Flag on Technicals: Death Cross Is Inevitable

Entering mid-December, Bitcoin and Ethereum both confirmed death crosses — the 50-day moving average falling below the 200-day moving average. The appearance of this technical pattern instantly ignited market concerns about a “crypto winter.” According to the latest data, Bitcoin’s current price hovers around $93,450, with a 7-day increase of 6.34%, but this rebound appears insignificant compared to the structural pressure it faces.

From a technical indicator perspective, the outlook is indeed bleak. The Average Directional Index (ADX) reads 32.9, entering a strong trend zone — meaning the downtrend is not just a false alarm but supported by real buying and selling momentum. The Relative Strength Index (RSI) stands at 44.26, neither oversold enough to attract bottom-fishers nor overbought enough to warrant profit-taking, leaving the market in a state of ambiguity and neutrality.

More painfully, Bitcoin’s key support levels are at $82,084 and $68,384, while resistance levels are at $99,036 (recent) and $105,000 (200-day moving average). In other words, every upward step must contend with resistance, while downward movement could be smooth sailing.

Market Liquidity Dries Up, Year-End Trading Volume Shrinks

Last weekend, Bitcoin attempted a rebound but was ruthlessly pushed back during Monday’s U.S. morning session. Rising bond yields and weak stock markets exerted dual pressure, trapping this crypto market leader within a range.

On-chain data shows that since October, the open interest of BTC and ETH perpetual contracts has shrunk by nearly 50%. This is not a good sign — declining open interest indicates a significant reduction in the market’s capacity to absorb large trades, making directional trading more prone to sharp price swings, and also reflecting a clear decline in market participation.

The spot Bitcoin ETF performance is even more disappointing. The U.S.-listed spot BTC ETF continues to see outflows, with traders not increasing holdings during rallies but instead selling into strength. This “selling on rallies” behavior is clearly visible in the negative CVD (Cumulative Volume Delta), which often signals subsequent downside risk.

The Fed’s “Hawkish” Rate Cut Trap

The market has fully priced in the Fed’s 25 basis point rate cut expected this week; the rate cut itself is no longer a variable. But this is precisely the problem — the real risk does not come from the rate decision itself but from the Fed’s guidance on future policy paths.

Traders’ expectations suggest that the Fed will pause rate cuts in January, indicating investors believe the Fed is adopting a mild, superficial easing strategy rather than a full rate-cut cycle. In other words, the room for monetary policy easing is limited, posing a direct threat to risk assets like Bitcoin.

Even more dangerous is the divergence in global central bank policies: split opinions within the Bank of England, a hawkish stance from the European Central Bank, and the Bank of Japan preparing to tighten policy — such policy uncertainty will amplify downside pressure on the crypto market. If the Fed signals hawkishness in its easing pace or magnitude, Bitcoin’s downside risk will be instantly activated.

Weak Spot Demand, Worsening Market Structure

On-chain analysis shows that over 7 million Bitcoins are currently in unrealized loss, a pessimistic atmosphere similar to the 2022 bear market consolidation phase.

While capital inflows remain positive (averaging about $8.69 billion per month), they have significantly declined from peak levels, providing limited buffer against downside risks. As spot demand weakens, market buying support diminishes sharply, further weakening direct price support and increasing sensitivity to external shocks and macro-driven volatility.

In contrast, the S&P 500 is still approaching all-time highs, while Bitcoin remains trapped in a narrow range. This divergence deepens the perception of crypto assets’ relative weakness compared to risk assets.

Overall Market Sentiment: Fear Dominates but Not Extreme

The total crypto market capitalization is currently $3.08 trillion, with the Fear & Greed Index rising to 24 (fear zone), far from the extreme fear index 10 seen at the end of November. Although the market has rebounded somewhat after last week’s panic, it’s merely a short-term pause before the “death cross” curtain falls.

Ethereum performed relatively better, reaching a level not seen in over a month compared to Bitcoin, but still unable to escape the overall downtrend. The broader crypto market (measured by the CoinDesk 20 index) declined 0.8%, with altcoins generally weakening.

Technical Pattern Indicates Accelerating Downtrend

The Ichimoku cloud shows a short-term bearish setup. Even if prices rebound, the outlook remains grim. The compressed momentum indicator suggests bullish impulses, hinting at a tug-of-war between bulls and bears at resistance levels that have persisted for weeks, but in the overall bearish context, this rebound momentum is clearly insufficient to change the trend.

Outlook: Find a Breakout or Wait for Winter?

Whether Bitcoin can break through the $90,000 level depends on two factors: first, whether the Fed’s policy guidance on Wednesday remains as dovish as expected; second, whether global capital can reallocate investments amid macro uncertainties.

If financial conditions further loosen or the dollar continues to weaken, the crypto market might get a breather. But if the Fed signals hawkishness, breaking below the $82,084 support and aiming for the strong support at $68,384 is no longer just speculation.

Historically, the death cross sometimes signals a local bottom, and sometimes indicates a deeper decline. Which scenario will unfold this time remains to be seen, and only market action will tell.