Bitcoin's Volatile Jump Sparks Debate
Bitcoin experienced a significant surge on Tuesday, gaining 5.7% in what marked its fifth best daily return for the year. However, this rally quickly lost momentum, leading analysts to question whether it represents a 'fake breakout' or the start of a sustained upward trend.
Market Movements and ETF Inflows
During the spike, Bitcoin briefly broke above $93,000 before retreating, currently trading around $92,772 according to CoinGecko. Trading volume has increased by 16%, with $128 billion worth of coins changing hands.
In a positive sign, Bitcoin ETFs saw $58.5 million in inflows on Tuesday, a sharp rise from just $8.5 million the previous day. BlackRock's IBIT led with $120 million in new capital, though this was partially offset by a $90.9 million net loss for the ARK 21Shares Bitcoin ETF (ARKB).
Analyst Perspectives on the Rally
Bitunix analysts described the price action as resembling a potential 'fake breakout', noting that Bitcoin has shifted into a choppy pullback phase. They emphasize the importance of whether BTC can stabilize within the $90,000–$91,000 support zone.
QCP Capital analysts highlighted that while markets appear calm, traders are bracing for the next catalyst, particularly the upcoming Federal Reserve meeting.
Federal Reserve Uncertainty
Markets are closely watching the U.S. central bank's December rate decision, with traders now assigning an 89% probability of a rate cut, up from 66.8% a month ago. However, the Fed is operating without fresh inflation or employment data due to backlogs from the recent government shutdown, adding to market uncertainty.
Beyond the immediate meeting, analysts point to other macroeconomic catalysts, including potential leadership changes at the Fed. Betting markets suggest an 85% probability that Kevin Hassett could become the next Fed Chair, with a decision expected early next year.
Broader Context
Despite the recent volatility, Bitcoin's price remains about 14% lower than its early November levels but is roughly even with where it traded this time last year. The market continues to navigate macroeconomic uncertainties that are keeping investors unsettled.
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