Bitcoin has surged past $90,000, rebounding from a recent low of $80,000 recorded last Friday. This notable price movement occurs just ahead of the Thanksgiving holiday, a period typically characterized by declining values for the cryptocurrency. In previous years, Bitcoin has experienced downturns on the eve of Thanksgiving, but this year”s performance deviates from that historical trend.
Having dropped 28% from its all-time high of $126,000, Bitcoin”s recent ascent of approximately 12% from its earlier low has traders reassessing their perspectives. Currently, the cryptocurrency is holding steady above the $90,000 mark, indicating a nearly 3% increase within the last 24 hours. However, it remains down 21% compared to its price from a month ago.
This price increase aligns with a broader positive sentiment in the stock market, where indices such as the S&P 500 and Nasdaq Composite have also seen gains, spurred by growing expectations surrounding a potential Federal Reserve rate cut in December. Despite this uptick, experts caution against viewing Bitcoin”s recent movements as indicative of a full recovery, given the ongoing volatility in market conditions.
According to Torsten Slok, Chief Economist at Apollo Management, the correlation between Bitcoin and the Nasdaq Composite has weakened in recent weeks. He emphasized that Bitcoin”s price volatility contrasts with the broader stock market”s performance, noting that the cryptocurrency has been more susceptible to market sentiment influenced by Federal Reserve communications rather than direct actions, such as rate cuts.
Market strategies indicate that many traders believe Bitcoin will continue to oscillate within a confined price range. Options data suggests a cautious approach, with market participants leaning towards selling call options rather than anticipating significant price movements. This behavior reflects a broader expectation of limited volatility during the historically low-volume Thanksgiving trading period.
As the market approaches the holiday, Bitcoin”s price activity is likely to remain subdued due to expected lower trading volumes, which could limit the potential for drastic price changes. Looking ahead to December, the anticipated actions from the Federal Reserve could significantly impact risk assets, including Bitcoin. Should the Fed decide to enact a rate cut, it might provide a boost for the cryptocurrency, although the ultimate outcome will still hinge on overall market sentiment.
For now, Bitcoin”s recovery above the $90,000 threshold offers a glimmer of hope for traders, yet it is premature to label this as the beginning of a sustained uptrend. Investors will be closely monitoring developments in both the cryptocurrency market and the broader financial landscape in the weeks to come.
