Bitcoin price reached an all-time high of $106,648 on Monday, but has since fallen back. The U.S. Federal Reserve is widely expected to cut interest rates on Wednesday, but the outlook for 2025 is uncertain. The US Bitcoin Spot ETF recorded total inflows of $2.17 billion last week, indicating continued strong demand. Technical indicators are showing signs of early bearish divergence in RSI and AO, suggesting that bullish momentum is weak.
Bitcoin (BTC) price fell on Monday after reaching an all-time high (ATH) of $106,648 in early Asian trading. The main factor influencing BTC prices this week is likely to be the US Federal Reserve’s (Fed) interest rate decision on Wednesday. The US central bank is expected to cut interest rates (which is good for risky assets like Bitcoin), but it also suggests that the cuts in 2025 will be smaller than previously expected.
The recent rise in new ATHs is supported by continued strong inflows of $2.17 billion into US Bitcoin spot exchange-traded funds (EFTs) last week. Still, traders should remain cautious as technical indicators such as the Relative Strength Index (RSI) and Awesome Oscillator (AO) showed early bearish divergence, suggesting bullish momentum is fading. .
Bitcoin hits all-time high of $106,600 ahead of Fed decision
Bitcoin price hit a new all-time high of $106,648 earlier this week on Monday, after rising 3.2% in the previous week. The Fed's interest rate decision, scheduled for Wednesday, could fuel further gains in Bitcoin prices.
According to CME's FedWatch tool, which tracks the probability of a Fed rate change implied by the future price of federal funds, there is a 97.1% chance of a 25 basis point rate cut, with the remaining 2.9 percentage points of a sustained rate cut. That's what it means. Stable.
Target rate probability chart. Source: CME FRB Monitoring Tool
Lower interest rates tend to favor risky assets like Bitcoin, as lower interest rates tend to stimulate the economy. However, the market reaction to Wednesday's Fed decision may not be driven by the interest rate decision itself (unless there is a big surprise), but rather by the Fed's projections of what interest rates will be in 2025. expensive.
If these forecasts reflect a slower or smaller pace of interest rate cuts next year, US Treasury yields and the US dollar are likely to rise, making it difficult for risk assets, including BTC, to become more attractive to investors. Probably.
ETFs provide ongoing support
Looking at Bitcoin institutional investor flows, they continued to be strong last week. Bitcoin Spot ETF data recorded total net inflows of $2.17 billion last week, according to Coinglass. If this inflow trend continues or accelerates, Bitcoin could rise further in the coming days.
Total Bitcoin Spot ETF Net Inflows Chart. Source: Coinglass
Since the bull market began on October 10, the number of wallets holding at least 100 BTC has increased by almost 10% in nine weeks, from 16,062 to 17,644, according to Santimento data. This rise in BTC wallets shows investor confidence and contributed significantly to the current rally.
A wallet holding at least 100 BTC charts. Source: Santiment
Darius Sit, founder and chief investment officer of QCP Singapore digital asset firm, told FXStreet in an exclusive interview that he has never been more bullish on Bitcoin. Darius explained that the main reason for his bullish outlook is due to the surge in liquidity for Bitcoin.
“This year, we are seeing cryptocurrencies and Bitcoin being brought into traditional markets, infrastructure and traditional market liquidity,” Darius told FxStreet.
“I think it's now starting to have an impact on debt financing.Equity financing is changing the way everyone, from individuals to businesses to countries, thinks about their future and how they raise money. It's starting to impact how you think and how you think about your finances,” Darius explains.
Darius said the signs traders should be on the lookout for are “one of the volatile downsides that deleveraging can have, but it also increases the impact of deleveraging and real institutions with leverage on their balance sheets.'' , quasi-sovereigns, and sovereigns.”
Despite Bitcoin hitting new highs, traders should be cautious as CryptoQuant data shows estimated leverage ratio (ELR) has reached a yearly high and a correction is likely due to leverage overheating. is necessary.
Bitcoin estimated leverage ratio chart. Source: Santiment
Bitcoin Price Prediction: Will it rise towards $119,000 or return to $90,000?
Bitcoin price reached an all-time high (ATH) of $106,648 early in the Asian trading session, but fell back to around $103,600 during Monday's European trading session.
Despite reaching new highs, traders need to remain cautious as momentum indicators indicate a pullback is likely. The Relative Strength Index (RSI) and Awesome Oscillator (AO) indicators on the daily chart are showing early signs of bearish divergence, with the price highs not being reflected in the RSI and AO highs, giving bearish signs. It shows. Bullish momentum.
If BTC faces a pullback and closes below $100,000, it could extend the decline to retest the $90,000 support level.
BTC/USDT daily chart
However, if BTC continues its upward momentum, the rally could extend to test a new ATH of $119,510. This level coincides with the 141.4% Fibonacci extension from the November 4th low of $66,835 to the December 5th high of $104,088.
Frequently asked questions about Bitcoin, altcoins, and stablecoins
Bitcoin is the largest cryptocurrency by market capitalization and is a virtual currency designed to function as money. This form of payment is not controlled by any particular person, group, or entity and eliminates the need for third parties to participate during financial transactions.
An altcoin is any cryptocurrency other than Bitcoin, but some consider Ethereum to be a non-altcoin because it is these two cryptocurrencies that forks occur. If this is true, Litecoin would be the first altcoin to fork from the Bitcoin protocol and thus be an “improved” version of it.
A stablecoin is a cryptocurrency that is designed to have a stable price, and its value is backed by the reserves of the asset it represents. To achieve this, the value of one stablecoin is pegged to a commodity or financial instrument, such as the US dollar (USD), and its supply is regulated by an algorithm or demand. The main purpose of stablecoins is to provide an on/off ramp for investors who wish to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value, as cryptocurrencies are generally volatile.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the market capitalization of all cryptocurrencies combined. This clearly shows the interest in Bitcoin among investors. BTC's dominance typically occurs around bull markets, where investors turn to relatively stable, high-market-cap cryptocurrencies like Bitcoin. Decreasing BTC dominance usually means investors are moving their capital and profits to altcoins in search of higher returns, which usually causes an explosive rally in altcoins.
