Cryptocurrency market analysts are growing more confident that the rebound of Bitcoin could extend further, as the asset has climbed steadily since finding support just above $82,000 on Friday.

Tech equities and cryptocurrencies sold off sharply over the past two weeks, a move Capriole Fund founder Charles Edwards attributed to the market “flip-flopping on expectations for a rate cut.” He added, “As the market reverts, expect it will carry Bitcoin somewhat higher.”

Wealth manager Swissblock noted that Bitcoin has taken its first meaningful step toward establishing a bottom. According to its team, “The Risk-Off Signal is dropping sharply, which tells us two things: selling pressure has eased, and the worst of the capitulation is likely behind us, for now.” They also emphasized that the coming days will be important, as they need “to see selling pressure continue to fade.”

Swissblock added that market bottoms often form after a second, weaker wave of selling that holds above prior lows. “That second wave usually marks seller exhaustion and a shift in control back toward the bulls,” they wrote.

Shifting rate-cut expectations

Data from TradingView shows Bitcoin reached $80,600 on Coinbase on Friday, the lowest price since mid-April. This placed the depth of its retracement from the early October all-time high above $126,000 at roughly 36%.

The odds of a December Federal Reserve rate cut dropped to about 30% last week but have since risen back to near 70%, Edwards said. As of now, the CME FedWatch Tool reflects a 69.3% probability of a 0.25-point reduction at the central bank’s Dec. 10 meeting.

Market research account “Global Markets Investor” commented on the rapid shift, noting, “What a difference two days make in market expectations,” while sharing a chart showing the swing on Polymarket.

Liquidity boost could be on the horizon

Some analysts are also watching for potential liquidity support from the Federal Reserve. Market analyst “Sykodelic” said on Sunday, “I really would not be surprised to see the Fed announce something at the next meeting in the way of ‘reserves management’ … essentially, liquidity expansion.”

They added that the central bank will eventually need to provide liquidity, “otherwise they go bankrupt,” and warned that “If you are betting on a year-long bear market, you are basically betting that the USA will let itself go broke.”

Historically, interest rate cuts and expanded liquidity have been positive catalysts for risk assets such as cryptocurrencies, with previous phases of quantitative easing followed by notable market rallies.

Sources:

https://cointelegraph.com/news/bitcoin-selling-pressure-has-eased-and-climb-will-continue-analysts

https://x.com/GlobalMktObserv/status/1992692130175648101

https://x.com/swissblock__/status/1992754988783931590

https://x.com/Sykodelic_/status/1992351071310872736