- Bitcoin surpassed $90,000, driven mainly by revised odds of a Federal Reserve rate cut in December, now at 85% probability.
- The price surge caused over $240 million in short position liquidations, more than triple the long liquidations.
- Analysts highlight resistance near $95,000 and note mixed Federal Reserve views on rate cuts.
- Options market activity indicates Bitcoin may remain range-bound between $80,000 and $95,000.
On Wednesday, Bitcoin rose above $90,000 for the first time in nearly a week, driven by improved risk sentiment rather than crypto-specific news. The rally began after an intraday low near $86,400 and has shown resilience, with Bitcoin currently trading around $91,500, as reported by CoinGecko. According to a Thursday report by Singapore-based trading firm QCP Capital, this price increase reflects market adjustments to the growing likelihood of a Fed interest rate cut in December.
This shift in sentiment corresponds with data from the CME FedWatch tool, which places the probability of a 25 basis-point reduction by the Federal Reserve at 85%. Similarly, prediction market Myriad shows users assigning an 83% chance to this outcome.
The rally caught many short sellers off guard, resulting in $241 million worth of short liquidations over the preceding 24 hours, according to Coinglass. This amount is more than three times the value of long liquidations. The upward momentum coincided with four consecutive daily gains in the S&P 500 index, aligning Bitcoin’s recovery with broader financial markets.
Despite the generally bullish atmosphere, some risks persist. QCP Capital notes that while four Federal Reserve officials support cutting rates, six remain opposed, and two are neutral. Bitcoin remains sensitive to macroeconomic factors, reflecting overall market risk appetite. Additional potential risks include the reported possibility of MicroStrategy being removed from the S&P 500 index, which could cause renewed bearish pressure.
Institutional activity in the options market reached $2 billion this week, with significant long call condor bets. This strategy involves purchasing four call options with the same expiration but differing strike prices, limiting both risk and profit. It suggests traders expect Bitcoin to stay within a certain price range, favoring stability over sharp moves.
Analysts expect Bitcoin to remain range-bound, with resistance near $95,000 and key support levels between $80,000 and $82,000. Distribution related to exchange-traded fund (ETF) activity may limit rallies beyond the upper resistance zone.
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