Bitcoin has made a notable recovery on Tuesday, trading at $87,087, reflecting a modest increase of 0.6% from the previous day’s sharp dip. This resurgence follows a steep selloff on Monday, where the cryptocurrency plummeted over 7% to briefly fall below $84,000, alarming many traders who had just witnessed a rebound from around $80,000 late last week.
This recent downturn expanded upon a dismal November for Bitcoin, marking its worst monthly performance in over four years, compounded by heavy outflows from spot Bitcoin ETFs during the same period. As the cryptocurrency landscape faces heightened volatility, traders are keenly watching the market for signs of recovery.
Compounding the recent market movements, reports indicated a surge in whale inflows to major exchanges leading up to the price drop, alongside algorithmic selling that amplified the decline. Analysts have expressed concerns that if this downward momentum persists, Bitcoin might test the price ranges between $60,000 and $65,000.
Manufacturing Sector Declines Ahead of FOMC Meeting
The U.S. manufacturing sector is signaling potential economic troubles, with the ISM Manufacturing PMI releasing data that indicates contraction for the ninth consecutive month. For November, the PMI came in at 48.2, marking a decline from October’s 48.7 and falling short of forecasts which anticipated a reading of 49.0.
Jerome Powell, the Chair of the Federal Reserve, delivered a speech at Stanford University on Tuesday but refrained from making any remarks regarding monetary policy, adhering to the pre-FOMC blackout period. His previous comments at an October press conference left the market uncertain about the possibility of a rate cut.
High Odds for Federal Reserve Rate Cut
Market expectations for easing monetary policy have surged, with the CME FedWatch Tool indicating that there is an approximately 87% likelihood of a 25 basis point rate cut during the Federal Reserve meeting scheduled for December 10. Some analysts are projecting that this could rise even further as the meeting date approaches.
Joe Saluzzi, head of Equity Market Structure at Themis Trading, believes that the upward trend may continue gradually into the year-end, providing a glimmer of hope amidst economic uncertainty. Meanwhile, speculation mounts regarding potential replacements for Powell, as White House economic adviser Kevin Hassett appears to be a leading contender for the position.
In the aftermath of the Monday selloff, Bitcoin trading volume remained robust. The digital asset recorded a low of $83,862 and a high of $87,325 within just 24 hours. This indicates a willingness among traders to buy the dip, showcasing the resilience of trader sentiment despite the tumultuous market conditions.
Moreover, Bitcoin futures open interest experienced a slight uptick, increasing by 0.25% to $57.70 billion. This growth was complemented by a 0.63% rise in futures open interest on CME, although Binance and Bybit saw declines of 0.72% and 3.57%, respectively.
The recent market fluctuations have been attributed to a mix of profit-taking, thin liquidity, and cautious investor sentiment preceding major macroeconomic events. As investors remain focused on both the Federal Reserve’s decisions and the political implications resulting from potential changes in Fed leadership under President Trump, Bitcoin continues to navigate a complex and volatile trading environment.
