- Bitcoin rose to approximately $91,950 on Sunday, recovering from December lows near $85,000.
- Market participants remain cautious following a $19 billion leverage wipeout in October, which reduced liquidity.
- Inflation in services and shelter prices continues to challenge the Federal Reserve’s rate-cut plans.
- Forecasts showing a rise in jobless claims and the end of quantitative tightening have increased expectations for a potential rate cut.
Bitcoin climbed to about $91,950 on Sunday, regaining the $90,000 level as investors await the Federal Reserve’s final interest-rate decision this year and the upcoming jobs data release. The cryptocurrency has recovered from early December lows near $85,000 and is up 5.3% for the month, according to CoinGecko data.
The asset has traded within a narrow range since an early October event caused a $19 billion leverage wipeout. This event led to reduced market liquidity, as many market makers remain hesitant to reenter on a large scale. Ryan McMillin, chief investment officer at Merkle Tree Capital, noted that “Low liquidity is still an issue for the market” and “order books were wiped out” after the October 10 incident.
Inflation trends remain uneven, with services inflation cooled from last year’s peaks but still stronger than goods prices. Shelter costs continue to run above the Fed’s target, complicating the central bank’s goals for disinflation. This uncertainty has kept traders cautious about the timing and extent of possible rate cuts. Meanwhile, precious metals like Gold and silver have surged, while Bitcoin remains sensitive to macroeconomic shocks more than U.S. equities.
Economic forecasts anticipate an increase in weekly initial jobless claims to 30,000, up from 191,000 previously reported. This data could support the Federal Reserve’s case for reducing interest rates. The Fed also ended quantitative tightening on December 1, a policy where the central bank reduces its asset holdings.
According to McMillin, “a cut is not just about certain” now that economic indicators are normalizing, and “the market is set to rally.” He added that a rate cut could serve as a catalyst for renewed market momentum.
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