CME FedWatch puts the implied chance of a Fed rate hike at 100% for the December 9 meeting, according to the November 12 snapshot. This is another source of pressure on Bitcoin, and there is a good chance the market is going to face its full effect.
Bitcoin and the cryptocurrency market in general aren't set in stone and are highly affected by the performance of traditional markets and the global economy. A rate hike directly affects the desire of investors to expose themselves to riskier assets like crypto.
Source: FedWatch
Bitcoin has been going down rapidly even without the additional source of pressure from the Fed. The current BTC price drop appears to be mostly fueled by insufficient compensation for the risk: Bitcoin and crypto in general aren't as attractive as tech or AI stocks, so it is far better to get exposed to the latter ones.
That is the bearish reading here. FedWatch reflects futures pricing, so the hike is already expected rather than guaranteed to become a fresh shock.
Bitcoin below $70,000？
Bitcoin is trading at $72,744, below all the moving averages shown on the daily chart. A drop below $70,000 shouldn't necessarily trigger any substantial surge of selling pressure, considering how stretched the decline already looks.
The imbalance of inflows and outflows is still staggering in this reading of the market. The concern is that almost every top-15 crypto asset remains in endurance mode, facing persistent outflows fueled by security concerns, a retreat in investor sentiment and a lack of substantial recovery prospects.
This view draws on Coinglass, CryptoQuant and SosoValue, which track derivatives, on-chain activity and ETF behavior respectively. The interpretation is that all three fields show outflows from digital assets alongside a growing supply of stablecoins.
A full-blown recovery of the cryptocurrency market would need new catalysts and use cases. A potential burst of the AI bubble, with substantial losses for the largest market players, might push them towards digital assets. A transition is possible, but it's not guaranteed by any means.
The confirmation of a market recovery would only come if we witness higher highs and constant inflows into institutional products like ETFs.