Bitcoin has shown improvement after dipping to just above $82,000 on Friday, as analysts noted a reduction in selling pressure and an increase in expectations of a Federal Reserve rate cut.

Bitcoin’s Recovery Boost

Crypto market analysts express optimism regarding Bitcoin’s resurgence. Following a recent decline, with trading solidly above $82,000, there are signs that Bitcoin could gain momentum. Capriole Fund founder, Charles Edwards, mentioned on Monday that tech stocks and crypto markets experienced a downturn recently due to uncertainties around interest rate cuts. He stated, “As the market reverts, expect it will carry Bitcoin somewhat higher.”

Analysts from Swissblock remarked that Bitcoin has taken steps towards recovery, suggesting it’s beginning to seek a bottom. They pointed out:

“The Risk-Off Signal is dropping sharply, which tells us two things: selling pressure has eased, and the worst of the capitulation is likely behind us, for now.”

They further suggested the importance of this week, stressing the need for ongoing reductions in selling pressure. However, they acknowledged that a second, weaker wave of selling often follows, which historically indicates seller exhaustion, potentially reversing control back to the bulls.

Bitcoin selling pressure is falling. Source: Swissblock

TradingView data revealed that Bitcoin fell to $80,600 on Coinbase on Friday, marking its lowest point since mid-April. This drop represented a 36% decline from its all-time high of over $126,000 earlier in October.

Heightened Fed Rate Cut Expectations

The likelihood of a Federal Reserve rate cut in December experienced fluctuations, dropping to about 30% last week but rebounding to 70%, according to Edwards. Current probabilities indicate a 69.3% chance of a 0.25 basis point cut at the December 10 meeting of the central bank.

Related: Bitcoiners buoyed by rising expectations for Fed rate cut in December

Market research account “Global Markets Investor” reported the rapid change in market expectations, underlining the volatility in prediction metrics.

Fed rate cut predictions flip back toward 70%. Source: Global Markets Investor

Impending Liquidity Injection

Market analyst “Sykodelic” speculated about potential future announcements from the Fed regarding liquidity measures at the upcoming meeting, mentioning, “I really would not be surprised to see the Fed announce something at the next meeting in the way of ‘reserves management’ … essentially, liquidity expansion.”

They stressed the necessity for liquidity to avoid bankruptcy.

“If you are betting on a year-long bear market, you are basically betting that the USA will let itself go broke.”

Interest rate cuts and enhanced liquidity are generally positive signs for high-risk investments like cryptocurrencies, as historical quantitative easing initiatives have preceded significant market upswings.