TLDR
Bitcoin climbs over $90,000 after hitting a low of $80,000 last Friday.
Bitcoin has dropped 28% from its all-time high of $126,000.
Traders expect Bitcoin to hold within the $85,000 to $90,000 range.
Despite recent gains, Bitcoin remains down 21% over the past month.
Bitcoin regained the $90,000 level on Wednesday, a move that stood out in contrast to the usual pre-Thanksgiving market behavior. Traditionally, the day before Thanksgiving has seen Bitcoin prices decline. This year, however, the cryptocurrency managed to defy expectations with a notable surge. The price action marks a brief reversal from Bitcoin’s recent downward trend.
Price Recovery Amidst Lower Market Volumes
On Wednesday afternoon, U.S. trading saw Bitcoin surpass $90,000 for the first time in nearly a week. The timing of this movement is noteworthy because the Wednesday before Thanksgiving typically witnesses a weaker market. In fact, Bitcoin has fallen in six of the past seven years on this day, with sharp drops occurring in 2020 and 2021. The recent upward movement, however, has prompted traders to reassess their outlook.
Bitcoin climbed approximately 12% from its low of $80,000, reached just days earlier. Despite the recent rise, Bitcoin is still down by 21% from its price a month ago, and 28% from its all-time high of $126,000. At press time, Bitcoin was trading just above $90,000, marking a near 3% gain in the last 24 hours.
Market Trends Amid Uncertainty
The rise in Bitcoin’s price has coincided with a period of positive performance in the broader stock market. The S&P 500 and Nasdaq Composite both saw upward movement, driven in part by increasing bets on a potential Federal Reserve rate cut in December. However, experts warn that Bitcoin’s recent price action is not necessarily a sign of a V-shaped recovery, as market conditions remain volatile.
Torsten Slok, Chief Economist at Apollo Management, observed that Bitcoin’s correlation with the Nasdaq Composite has weakened in recent weeks. He noted that Bitcoin’s price has been more volatile compared to the broader stock market, highlighting the ongoing uncertainty around cryptocurrency investments. “Bitcoin has been path-dependent on Fed communication rather than on the act of cutting rates,” Slok said.
Bitcoin Trading Behavior and Market Positioning
Market strategies indicate that many traders expect Bitcoin to stay within a relatively tight price range. Options data suggests that traders are positioning themselves for little movement around the $85,000 to $90,000 levels.
Jasper De Maere, Desk Strategist at Wintermute, noted that market participants are more inclined to sell call options rather than place bets on major price shifts. This stance reflects an overall expectation of limited volatility during the low-volume Thanksgiving period.
Bitcoin’s price fluctuation over the past week highlights its sensitivity to market sentiment, including macroeconomic factors such as Federal Reserve actions. While many traders are cautious, the overall trend suggests that Bitcoin remains at a crossroads. Despite some recovery, the broader market’s direction, particularly in response to upcoming Fed decisions, will likely continue to influence the cryptocurrency’s performance.
Looking Ahead: Factors to Watch
As the market heads into the Thanksgiving holiday, Bitcoin’s price behavior will likely remain subdued, with lower trading volumes expected to reduce the potential for sharp price movements. However, the outlook for December remains critical. If the Federal Reserve enacts a rate cut, it could provide some support to risk assets, including Bitcoin, though strategists warn that the cryptocurrency’s price will still depend on broader market sentiment.
For now, Bitcoin’s recovery above $90,000 offers some optimism, but it is too early to say if this is the start of a more sustained uptrend. Investors and traders alike will be closely monitoring any developments in both the cryptocurrency and broader financial markets in the coming weeks.
