Bitcoin (BTC) Eyes $100,000 as Fed Rate Cut Bets Lift Market Sentiment

Bitcoin (BTC) looks set to snap a four-week losing streak in the week ending November 30. Rising bets on a December Fed rate cut lifted demand for risk assets, fueling inflows into BTC-spot ETFs. Crucially, the US BTC-spot ETF market also snapped a four-week outflow streak, supporting a recovery from the previous week’s low of $80,523.

BTC climbed to a Friday, November 28, high of $93,150 before easing back. Despite a modest pullback, holding onto the $90,000 handle will likely prove crucial.

The pickup in demand for spot ETFs and bets on a December Fed rate cut support a bullish short- to medium-term outlook.

Below, we consider the key drivers behind November’s sell-off, the short-term outlook, the medium-term trajectory, and the key technical levels traders should watch.

Fed Rate Cut Bets Revive Demand for BTC-Spot ETFs

US labor market data fueled speculation about a December Fed rate cut. The Kobeissi Letter commented on the latest Challenger Gray data, stating:

“Layoff announcements compiled by Challenger Gray spiked from 99,010 to 153,074, the highest since March. This also marks the highest monthly number for any October in 22 years.”

Notably, FOMC members appeared to shift focus away from inflation to a cooling labor market, raising expectations of a December rate cut. Highly influential New York Fed President John Williams recently signaled support for a cut, lifting sentiment.

Notably, BTC has rallied from the November 21 low of $80,523 in response to weaker US jobs data and dovish Fed rhetoric. In October, the Fed cut interest rates but downplayed a December cut, leading BTC to heavy losses and underscoring the Fed’s influence on demand.

According to the CME FedWatch Tool, the probability of a December Fed rate cut increased from 71.0% on November 21 to 86.4% on November 28.

The late November recovery reinforced a bullish short- to medium-term outlook, hinging on the Fed.

US BTC-Spot ETFs Snap Four-Week Outflow Streak

The US BTC-spot ETF market saw $70.2 million in net inflows in the reporting week ending November 28, ending four consecutive weeks of outflows. Despite weekly inflows, BTC has plunged 16.85% in November as ETF issuers have reported total net outflows of $3.47 billion in the month. ETF flows and November’s losses underscore the significance of institutional demand on BTC’s price trajectory.

In my view, sustained inflows into BTC-spot ETFs would reinforce a bullish short- to medium-term outlook.

Technical Analysis

Despite last week’s recovery, BTC remains below the 50-day and 200-day Exponential Moving Averages (EMAs). The EMAs affirm bearish momentum after mid-November’s death cross. However, fundamentals are starting to diverge from the technical trend, signaling a potential rebound.

A break above last week’s high of $93,150 would bring the $94,447 resistance level into play. A sustained move through $94,447 will likely pave the way toward the 50-day EMA and the $100,000 psychological resistance level. Crucially, a breakout above the 50-day EMA would support a bullish short- to medium-term price trajectory.

Downside Risks: Fed Pivot and ETF Outflows

While rising bets of a December Fed rate cut and spot ETF inflows have lifted sentiment, downside risks linger.

In the week ahead, Fed Chair Powell, US jobs data, and the Personal Income and Outlays report will be key drivers.

Strong US jobs and inflation data, and hawkish Fed rhetoric could dampen bets on a Fed cut, weighing on sentiment. Given BTC’s drop to the November low of $80,523 on November 21, an $80,000 stop-loss is appropriate for traders carrying long positions, subject to risk appetite.

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Key Takeaways

In summary, several key events will influence BTC’s short to medium-term outlook:

• US economic data.
• FOMC members’ speeches.
• Legislative developments, including the progress of the Market Structure Bill on Capitol Hill.
• US BTC-spot ETF flow trends.

A break above the $100,000 threshold would signal a shift in momentum, bringing the all-time high of $125,761 into view.

Stay informed on BTC trends by monitoring macroeconomic developments, ETF flows, and technical indicators here.