Bitcoin has shown a slight recovery following a significant sell-off this week that drove the price down toward $80,000, raising concerns that a nightmare scenario of a bitcoin price crash could be imminent. The recent sell-off in bitcoin prices, following its remarkable ascent to a record high of $126,000 per bitcoin just last month, has ignited concerns about a potential $1 trillion crash in the cryptocurrency market. With U.S. president Donald Trump expected to “open the flood gates,” traders are in a frenzy, trying to adapt to the rapidly changing odds of a December Federal Reserve interest rate cut, which have unexpectedly turned dovish. Odds for a 25 basis point rate cut at the Fed’s December meeting have surged to 70%, rising from a mere 39% just a day earlier, as per reports. The surge follows remarks that alleviated market anxieties regarding the Fed potentially maintaining interest rates next month, spurred by unexpectedly robust jobs data from September.
“I still see room for a further adjustment in the near term to the target range for the federal-funds rate to move the stance of policy closer to the range of neutral,” stated John Williams in an interview. “Looking ahead, it is crucial to bring inflation back to our 2% longer-run target consistently.” It is equally important to proceed in a manner that does not introduce unnecessary risks to our ultimate employment objective. The shift in tone from a leading Fed official follows the release of meeting minutes from the Fed’s last gathering, which highlighted significant divisions among policymakers. Additionally, the delayed U.S. jobs data exceeded expectations, significantly lowering the likelihood of a third consecutive 25 basis point cut. Bitcoin and crypto traders are expressing optimism despite the challenging monetary policy environment this week, maintaining a positive outlook even as bitcoin experiences a nearly 40% drawdown in just over a month. “Bitcoin’s plunge from its October highs above $125,000 to now sitting below the $90,000 mark reflects a convergence of headwinds resulting in a sharp risk-off shift,” Nicholas Roberts-Huntley stated.
“The downturn has been fueled by tariff headlines, a robust dollar, and a surge of forced liquidations that struck an already overstretched market simultaneously.” Despite the fluctuations, the long-term fundamentals remain unchanged. This type of reset often serves to eliminate excess leverage, paving the way for a more robust upward movement. As we approach the end of the year, I anticipate that bitcoin will find stability and gradually move back up, maintaining a trading range between the $95,000 and $110,000 levels. “If macro conditions ease and flows turn positive again, a strong price push by December is absolutely still on the table.” Observers of Bitcoin and the broader crypto market have highlighted the ongoing challenges faced by the bitcoin price through 2025, suggesting that the anticipated bull market has not yet commenced. “The bear market began in December 2024,” stated Andreas Brekken. “This is evident from the BTC/EUR and BTC/GOLD charts.” It was masked by the historic inflation levels of the dollar. “With blood in the streets and widespread capitulation already evident, I anticipate that the next bull market will commence in the first quarter of 2026.”
Analysts have pointed out that the Fed’s anticipated conclusion of its quantitative tightening initiative, aimed at removing liquidity from the market, could play a significant role in reigniting the bitcoin price surge as we approach 2026. “With Fed quantitative tightening ending on December 1, the highs between August-October may prove to be just a midpoint,” Robert Le, head of research at institutional onchain asset and yield management platform Kiln, stated in an email. “If bitcoin is decoupling from its programmed cadence, I think the market could be mispricing both upside potential and downside risk, and this may be the first cycle where the peak doesn’t look like a peak.”