Crypto News: Bitcoin Stabilizes After Sharp Sell-Off Amid Rising Odds of Fed Rate Cut in December
As the new week begins, digital currencies are showing signs of stabilization after a severe sell-off. Bitcoin (BTC), the flagship cryptocurrency, has corrected more than 30% from its recent peaks. Market participants are closely watching the activity around U.S.-based crypto ETFs, which remain significant indicators of institutional investor sentiment.
Over the past month, Bitcoin-related ETFs have experienced record outflows totaling approximately $4.35 billion. Notably, BlackRock’s IBIT fund alone saw net outflows exceeding $1.2 billion last week. Meanwhile, total trading volume across these funds surpassed $40 billion, highlighting major portfolio restructuring by institutional investors.
Rising Expectations of Federal Reserve Rate Cut
A key driver of risk asset price movement today is the rapidly growing expectation that the Federal Reserve will cut interest rates in December. The market currently places about a 70% probability on a rate reduction, a significant jump from the roughly 20% likelihood priced in just a week ago.
As long as the U.S. equity markets continue recovering from their recent pullbacks, cryptocurrency prices are likely to follow a similar trend. Historical parallels exist—in the spring, crypto ETFs saw comparable levels of outflows amid the sell-off triggered by Trump’s tax policy changes.
Investor Pressure and Historical Context
Short-term Bitcoin investors are now facing average losses close to 30%. Historically, this magnitude of loss can signal one of two conditions: either a transition into a bear market or a potential bottoming phase during deep consolidation.
Reflecting on April’s market turmoil, Bitcoin’s worst slump from peak to trough was about 30%, similar to current levels. However, that prior correction was more gradual compared to the recent sharp decline. Presently, heavy profit-taking by large holders and long-term accumulators is contributing to selling pressure, while inflows from new retail investors remain limited. Many retail participants suffer losses related to the mid-October crash when hundreds of altcoins plunged over 50% within hours.
Ethereum Faces Significant Resistance
Ethereum (ETH) also faces challenges in regaining momentum, with price action likely to remain below the $3,000 level for now. Technical indicators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) point to weak market confidence. The recent “death cross” formation, where the 50-day exponential moving average crossed below the 200-day average, has historically had mixed implications—occurring four times since 2021, twice signaling a price bottom and twice preceding short-term rebounds followed by further declines.
Outlook: Potential for Bitcoin Bear Market
According to analysis from CryptoQuant, a drop below $80,000 in Bitcoin price could increase the likelihood of entering a bear market phase. This would exert prolonged pressure on short-term Bitcoin investors who have been heavily impacted by recent volatility.
Summary
- Bitcoin starts to stabilize after a steep 30% correction.
- Historic outflows from crypto ETFs, especially BlackRock’s IBIT.
- Fed rate cut probability for December surges to 70%.
- Market trends in stocks and crypto are currently aligned.
- Retail investors remain cautious following recent altcoin crashes.
- Ethereum’s technical indicators show weak momentum.
- Risk of Bitcoin entering a bear market increases below $80,000. Investors are advised to closely monitor macroeconomic signals, institutional flows, and technical developments to navigate the current volatile crypto landscape.
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