The Fed's Rate Cut Is Getting Closer, Is Crypto Ready for Another Rally or a Fake Pump?
The cryptocurrency market recovered in the European session on Wednesday, after a sharp shock at the beginning of the month. Bitcoin (BTC) held above $90,000, attempting to continue its rebound after falling to around $84–86,000 in early December due to a massive sell-off across the crypto market. Ethereum (ETH) returned above $3,000, and most major altcoins recorded gains compared to last week's levels, but began to show signs of stabilization after a sharp drop that triggered the liquidation of over hundreds of millions of dollars in leveraged positions in 24 hours.
Fundamentally, the main sentiment currently overshadowing crypto is the expectation of a Federal Reserve interest rate cut. Several analyses highlight that the probability of a December rate cut is around 80–87%, and a rate cut is seen as a positive medium-term catalyst for risk assets like crypto: the US dollar has the potential to weaken, liquidity increases, and interest in alternative assets like Bitcoin typically strengthens. However, prior to the Fed's official decision and Jerome Powell's speech, market participants opted to remain less aggressive, leading to volatile price movements without a clear direction.
The selling pressure in early December was not solely technical but also triggered by other macro factors: news regarding Japan's interest rate policy and tightening crypto regulations in China triggered a major wave of liquidations, pushing Bitcoin below $90,000. Furthermore, data showed significant outflows from major spot crypto ETFs throughout November, indicating some institutional investors were taking profits after the previous long rally.
On the altcoin side, market focus began to shift to the narrative that if the Fed actually cuts interest rates this month, several major coins could potentially lead a further rally. Several regional analyses highlighted altcoins such as XRP, ADA, and LINK, which are considered to be in low-risk accumulation zones ahead of a potential December "Santa Rally," as long as macro pressures don't worsen and Bitcoin is able to maintain its current key level.
Source: Newsmaker.id
