Bitcoin is trading at a pivotal level that analysts say could determine whether the market holds its broader uptrend or slips back toward spring lows.
Key Takeaways:
- Bitcoin is sitting on a crucial Fibonacci support level, with a breakdown risking a drop toward the April lows near $76,000.
- A weekend leverage flush pushed BTC below $88,000 before a sharp rebound.
- Traders now await the Fed meeting and key US economic data.
In a recent post on X, crypto trader Daan Crypto Trades said the 0.382 Fibonacci retracement zone is the line bulls must defend, warning that a breakdown could send BTC back to April levels near $76,000.
“It’s also pretty much the last major support before testing the April lows again, which would break this high time frame market structure,” he said.
Bitcoin Dips Below $88K in Weekend Leverage Flush, Analyst Says
Over the weekend, Bitcoin briefly dipped below $88,000 during another round of leverage washouts before rebounding above $91,500.
Analyst “Bull Theory” described the move as typical low-liquidity weekend manipulation aimed at flushing both longs and shorts.
The market now turns its attention to this week’s Federal Open Market Committee meeting, where a 0.25% rate cut is widely expected.
Still, crypto markets have cooled since the October cut, as Fed Chair Jerome Powell emphasized a data-dependent path rather than a predictable easing cycle.
Markus Thielen of 10x Research noted that traders expect a similar tone this week, cautious and potentially hawkish, keeping pressure on risk assets.
With ETF inflows softening and trading volumes thinning into December, Thielen said upside participation remains limited, while volatility compression leaves BTC more vulnerable to downside moves in the near term.
“Bulls will point to the Treasury General Account rebuild, the end of Quantitative Tightening, and looming rate cuts as a liquidity windfall for Bitcoin,” Thielen wrote.
He added that hypothetical macro tailwinds are “irrelevant if the underlying message lacks conviction and the market structure fails to support a sustained move.”
Nick Ruck of LVRG Research said upcoming U.S. jobs data and inflation figures may prove just as influential.
If they reinforce expectations for continued easing, he believes renewed liquidity inflows could fuel a broader recovery across digital assets.
As reported, a key on-chain indicator known as “liveliness” is climbing again, even as Bitcoin’s price action remains subdued.
Analysts say the divergence suggests renewed underlying demand, with dormant coins moving at levels not seen in years, a sign that long-term holders may be re-entering the market.
The indicator’s steady rise points to a major rotation of capital beneath the surface despite cautious sentiment.
Liveliness measures the balance between coins being transacted and those being held, weighted by age. It tends to rise during bull markets as older coins move at higher prices, reflecting fresh inflows and greater conviction.
Last week, Bitfinex said the market is showing “seller exhaustion” following a period of heavy deleveraging and panic-driven exits by short-term holders.
“The combination of extreme deleveraging, capitulation among short-term holders, and early signs of seller exhaustion has created the conditions for a stabilisation phase and a relief bounce,” the firm wrote.
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