The cryptocurrency market is demonstrating a notable recovery as the Thanksgiving holiday approaches, with several indicators mirroring trends observed in 2022 and 2023. Bitcoin has surged back above the $91,000 mark, while Ethereum has also reclaimed the $3,000 threshold, leading a wider market that is cautiously optimistic.
This rebound follows a significant sell-off earlier in November, and as traders prepare for a long U.S. holiday weekend, historical patterns suggest that this period often sets the tone for December trading activity.
Recent data from the Fear and Greed Index reveals a shift in market sentiment, improving from a reading of 11 last week to 22 today, although it remains firmly in the “Extreme Fear” category. This change coincides with a notable rise in the average crypto Relative Strength Index (RSI), which has moved from 38.5 to 58.3 in just a week, signaling increasing strength after a prolonged oversold period.
Furthermore, momentum indicators have turned positive, with approximately 82% of tracked cryptocurrencies displaying bullish trend momentum. Bitcoin, Ethereum, and Solana are all positioned within the bullish zone of CoinMarketCap”s MACD heatmap.
The current market recovery echoes patterns familiar from previous years. In both 2022 and 2023, the cryptocurrency market faced sharp declines leading into Thanksgiving, followed by stabilization into December. For instance, in 2022, Bitcoin experienced a drop to near $16,000 after the FTX collapse but found its footing by Thanksgiving, trading sideways until Christmas.
Contrastingly, in 2023, Bitcoin began the Thanksgiving period at $37,000, ultimately reaching $43,600 by Christmas, driven by optimistic expectations regarding exchange-traded funds (ETFs) and improving liquidity.
This year, the November downturn appears to have occurred earlier, with selling pressures now easing as evidenced by the shift of Bitcoin”s 90-day Taker CVD from a sell-dominant phase to a neutral state. This suggests that aggressive sellers have stepped back, and current funding rates reflect a similar trend.
Market analyst Tom Lee from BitMine described the current landscape as “limping” in the wake of significant liquidations that occurred on October 10. He noted that as market makers reduced their balance sheets, market depth weakened across exchanges. However, he posited that Bitcoin tends to exhibit dramatic movements when liquidity conditions improve, suggesting a potential for a strong rally in December should the Federal Reserve indicate a more lenient monetary policy.
On-chain data corroborates this outlook, with figures from Nexo indicating that users favor borrowing against Bitcoin rather than selling it, with BTC constituting over 53% of all collateral on the platform. This trend alleviates immediate selling pressure in the spot markets while simultaneously introducing hidden leverage that could trigger increased volatility in the future.
Three key factors are aligning with the post-Thanksgiving scenarios from previous years: a reduction in seller exhaustion, a recovery in momentum indicators such as MACD and RSI, and a stabilization of liquidity conditions. If this trend persists, December may present one of two potential outcomes: either a sideways consolidation similar to 2022 or a sharp rally akin to 2023, heavily influenced by the Federal Reserve”s remarks and ETF flow trends.
As the market transitions, the prevailing sentiment remains one of caution. While Bitcoin holds above $91,000, signifying a willingness among buyers to maintain key support levels, the order-book depth is still fragile. With declining selling pressure paired with a rise in technical momentum, the current environment mirrors previous post-Thanksgiving setups that preceded significant year-end movements. The next few weeks will be critical as macroeconomic signals and ETF demand will likely determine the market”s direction.
