Bitcoin has had a pretty terrible November — falling from $110,000 at the start of the month to lows of $80,600 a few weeks later.
Bulls are now resigned to the fact that it will be a monthly close in the red, and potentially the biggest loss since 2018.
However, there’s been some cause for optimism over the past week. BTC has rallied by 10.6% over the past seven days — reclaiming $90,000. While the world’s biggest cryptocurrency is some way off six-figure territory, it’s a step in the right direction.
The debate playing out on X now is whether Bitcoin will rebound for one last bullish gasp, or if this is a temporary uptick before a punishing bear market. Here, we’ll examine some of the key factors to look out for in December.
First, we begin with a word of warning: Thanksgiving celebrations in the US mean that liquidity has been much lower than usual this week. Wall Street was fully closed on Thursday, and is only open for a half-day on Friday. The big test will be whether this momentum holds next week.
Despite that, fears of a bubble growing in the AI sector — which have contributed to falling stocks over recent weeks — are beginning to subside. And crucially, optimism is growing that the Federal Reserve will be cutting rates in December.
The latest figures from the CME FedWatch tool suggest that there’s now an 84.7% chance of a 25-point basis cut on December 10. Just 15.3% believe rates are going to be held within their current range of 3.75% and 4%.
As we’ve explained in the fast, falling interest rates are good news for Bitcoin. Lower returns on savings tend to make riskier assets more attractive, and they unlock liquidity because the cost of borrowing falls.
ARK Invest noted that a number of key Fed officials have signaled their support for reducing rates further — and a slew of recent macroeconomic data, including rising unemployment and soft retail sales, “reinforces the case for easing.”
“With liquidity returning, quantitative tightening ending December 1st, and monetary policy turning supportive, we believe conditions are building for markets to potentially reverse recent drawdowns.”
We’re also waiting to find out who will succeed Jerome Powell as Fed chair. Five pro-crypto candidates were previously on the shortlist, and there are rumors that Donald Trump could unveil his pick before Christmas. The president has long lobbied for the US central bank to slash interest rates far more quickly. Selecting someone who shares that worldview would undoubtedly boost investor sentiment.
Coinglass data shows that, historically speaking, December tends to be one of the slower months of the year for Bitcoin. And here’s an uncomfortable fact: BTC has never secured gains in December following a November loss since 2013.
In a recent note, Wintermute argued “the internal structure of the market now looks materially healthier” — with a sharp fall in perpetual open interest meaning that the spot market is now the main hotbed of activity.
“It’s still a fragile tape, and with liquidity patchy and catalysts ahead, the next few sessions should set the tone for how we enter the final month of the year, but after weeks of macro-driven pressure, the conditions for consolidation are finally in place.”
Others, such as QCP Capital, think that it’s unlikely that BTC will manage to accelerate beyond the mid $90,000s. Institutional inflows into Bitcoin ETFs have remained pretty tepid, and are yet to bounce back after billions of dollars of outflows earlier in the month.
A JPMorgan note argues that this institutional involvement is crucial to Bitcoin’s long-term future, as retail investor participation has fallen substantially. It also claimed that the four-year cycle has now taken a backseat, with “broader economic trends” now influencing price.
“One speaker noted that it could potentially reach $240,000 over the long-term, thus indicating it as a multi-year growth play.”
Meanwhile, Arca portfolio manager David Nage believes Bitcoin is currently going through a “Facebook moment.” The social network saw teenagers leave the social network and be replaced by older users, and BTC has seen original investors pivot away to other digital assets that embody its values. He notes that this wasn’t the end of Facebook — as it grew “massively bigger” instead. Will we see the same with Bitcoin?
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