Bitcoin’s Recent Price Movements
Bitcoin experienced significant volatility on Friday, dropping below $95,000 in the morning before stabilizing and then falling again in the afternoon. The cryptocurrency was trading at $95,390 at the time of writing, representing a 2.8% decline over the past day and a 7.5% drop compared to the previous week. This marks the third time Bitcoin has slipped below $100,000 within a month, with liquidations exceeding $1 billion during this recent downturn.
Analysts suggest the initial panic selling from short-term holders appears to have eased for now. The market had been testing the $100,000 level multiple times before finally breaking below it this time around. The last period when Bitcoin traded below six figures was back in May, making this recent decline particularly noteworthy for market observers.
Short-Term Holder Behavior and Market Dynamics
According to CryptoQuant analyst CrazzyBlockk, Bitcoin’s market performance is heavily influenced by the profitability of its newest participants. “The Bitcoin market is significantly influenced by the profitability of its newest participants, who represent fresh capital and liquidity,” they explained. “A dynamic price uptrend is typically sustained when these new investors are in profit, which builds market confidence.”
When short-term holders begin experiencing losses between 20% to 40%, it typically triggers panic selling. However, the current loss levels haven’t reached the threshold that historically signals a transition into a full-scale capitulation phase. This suggests we might be witnessing a mid-cycle correction rather than the beginning of a sustained bear market.
Federal Reserve Policy Impact
Market sentiment has been shifting regarding the Federal Reserve’s upcoming December meeting. Derivatives data indicates traders now see a 56.4% chance that the Federal Open Markets Committee will leave interest rates unchanged on December 9th. This represents a significant change from just a month ago, when traders estimated a 94% probability of another rate cut before 2026.
This shift in expectations matters because Bitcoin and other risk assets typically benefit when the Fed cuts interest rates, as this makes safe assets like treasury bonds less appealing. The current uncertainty around monetary policy has hit crypto markets harder than traditional equities, with crypto showing more negative skew compared to equity proxies like the Nasdaq 100.
Analyst Outlook and Market Recovery
Pepperstone Research Strategist Dilin Wu cautioned that the market isn’t yet showing clear signs of sustained recovery. She advised traders to remain cautious in the near term while acknowledging Bitcoin’s medium- to long-term potential. “Over the medium- to long-term, Bitcoin retains the potential to challenge new highs, but this hinges on sentiment improving, liquidity returning, and volatility easing,” Wu explained.
She also noted that while the four-year cycle provides some reference, it’s not a strict rule. “I focus more on actual market participation and funding conditions than on purely cyclical patterns,” she added. This balanced approach suggests that while current conditions warrant caution, the fundamental case for Bitcoin’s recovery remains intact if key market conditions improve.
