Bitcoin Retreats Below $90K Amid Market Turbulence and Fed’s Mixed Signals

The cryptocurrency market is once again showing signs of fragility today, December 11th, as Bitcoin (BTC) has pulled back to consolidate around the $90,000 mark. This decline has effectively erased nearly all the gains from the previous day’s brief rally, highlighting a significant shift in market sentiment.

Despite the U.S. Federal Reserve (Fed) delivering an anticipated 25-basis-point interest rate cut and announcing a new $40 billion short-term Treasury purchase program, the market’s overall risk appetite surprisingly weakened. This “buy the rumor, sell the news” dynamic has led to substantial selling pressure, underscoring a lack of conviction among investors.

Mass Liquidations Fueling Market Downturn

The broader cryptocurrency market has mirrored Bitcoin’s struggles, with major digital assets extending their week-long downtrend. Over the past 24 hours, a staggering $514 million in leveraged positions across the market have been liquidated, rapidly amplifying volatility and contributing to the sharp price corrections.

This current pullback follows a fleeting moment of optimism earlier in the week when Bitcoin briefly surged past $94,000 on Wednesday. While this move triggered a minor short squeeze, the bullish momentum proved unsustainable. BTC failed to decisively break through the critical upper resistance level that has capped its price for several weeks, ultimately retreating back into its familiar month-long trading range.

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Rapid Deleveraging and Macroeconomic Headwinds

A primary catalyst for this latest wave of declines has been the aggressive deleveraging across the market. According to CoinGlass data, long positions bore the brunt of the sell-off, with $376 million forcibly liquidated in the last 24 hours – almost three times the $138 million in short positions. This liquidation cascade accelerated sharply after Bitcoin breached its short-term trendline support.

Adding to the market’s woes, the macroeconomic landscape has offered little in the way of support. While the Fed’s rate cut was expected, the central bank’s updated projections for fewer rate reductions over the next two years have revealed internal divisions among policymakers regarding inflation and the economic outlook. This divergence has prevented the market from coalescing around a clear policy direction, further eroding investor confidence.

Expert Perspectives on Bitcoin’s Trajectory

Analysts are closely monitoring Bitcoin’s movements, offering varied outlooks:

• Alex Kuptsikevich, Senior Analyst at FxPro, observes a pattern of gradually increasing local highs and lows for Bitcoin since November 21st. However, he cautions that for this rebound to evolve into substantial capital growth, the total cryptocurrency market capitalization must surpass $3.32 trillion – a roughly 6% increase from its current $3.16 trillion.
• QCP Capital recently advised clients to prepare for Bitcoin to remain range-bound between $84,000 and $100,000 through year-end. This projection is attributed to weakening market liquidity and persistent positional imbalances.
• Mike McGlone, Senior Strategist at Bloomberg Intelligence, delivered a stark warning, suggesting that the eagerly anticipated “Santa Claus rally” might not materialize. He even forecasts that Bitcoin could dip below $84,000 by the close of the year.

Critical Support Levels Under Scrutiny

The market’s immediate focus is now on whether Bitcoin can successfully defend the crucial short-term support zone between $90,000 and $91,000. This range has been repeatedly tested over the past month, proving to be a significant psychological and technical barrier. A decisive breach below this level could pave the way for a deeper decline towards the bottom of its current trading range.

Conversely, if Bitcoin manages to stabilize and hold firm above this support, it could set the stage for a renewed attempt to challenge the $94,000 resistance area, potentially signaling a shift in momentum.