Mid-week, markets were shaken by an unexpected decline that caught investors unaware despite several promising developments. The Federal Reserve announced an end to quantitative tightening (QT), US and China reached a long-sought trade agreement, and two consecutive interest rate cuts suggested a shift towards easing monetary policy.

However, contrary to expectations, both Bitcoin and US equities fell. On-chain data indicated a dip in institutional demand, and a warning from Fed Chair Jerome Powell dampened the prevailing optimism.

As of Friday, market sentiment appeared fragile, with Bitcoin trading around $109,000.

Data That Predicted BTC’s Decline

Analyzing on-chain data, a significant indicator was the Coinbase Premium Gap, which flipped negative after a brief recovery. This metric indicates the price difference between Coinbase (which is preferred by US institutions) and global exchanges. Historically, it acts as a gauge for American institutional demand.

A negative reading suggests that US investors are selling or avoiding accumulation, revealing that Bitcoin’s price lacked robust institutional support. Retail investors, who may have been influenced by favorable macro news, likely misjudged its impact, confusing liquidity signals with sustained demand.

In a recent analysis, CryptoQuant detailed that Powell’s cautious approach further fueled the downturn. Even with QT coming to a halt on December 1, Powell’s statement that a rate cut in December isn’t assured reignited uncertainties surrounding the pace of monetary easing, causing markets to recalibrate risk, which ultimately led to declines in both Bitcoin and US equities. Compounding the fragile US-China accord, geopolitical tensions, particularly regarding renewed US nuclear tests, added further unease among investors.

Despite the current pullback, CryptoQuant indicates that this correction reflects a cooling of speculative excess. Institutional caution, temporary liquidity uncertainty, and geopolitical strains likely reset an overheated market sentiment. They anticipate that with the completion of QT and enhanced liquidity, risk appetite could gradually return, potentially renewing bullish momentum for Bitcoin and broader markets as they approach early 2026, contingent upon stable monetary and geopolitical conditions.

Additional Insights:

The latest reports from TeraHash’s analytics team suggest that while Bitcoin’s long-term uptrend remains intact, its momentum is noticeably slowing. In conversations with CryptoPotato, they opined that if the Fed continues to cut rates and macro conditions stay supportive, Bitcoin might reach a new all-time high either by late 2025 or early 2026.

Currently, they identify $98,000 as a vital support threshold; a drop below this level could see Bitcoin plummeting to around $70,000 as selling pressure mounts.

“At this stage, it’s crucial for Bitcoin to hold the $98,000 level. Losing it could easily push the price down toward the $90,000-$74,000 range. If these levels fail to hold, a deeper correction to the $70,000-$60,000 zone becomes likely. Still, it’s important to consider that Bitcoin has attracted investments from the world’s largest funds and continues to gain legitimacy in the public eye. This suggests that any correction is unlikely to occur abruptly or impulsively. If the Fed continues its interest rate cuts and global macroeconomic conditions remain favorable, we could see Bitcoin reach a new all-time high either by the end of this year or in early 2026.”

You might also find interesting:

• Bitcoin Dumps to Weekly Lows as Liquidations Skyrocket to Over $1.1 Billion
• Bitcoin Crashes After Fed Rate Cut as Traders Fall for ‘Buy the Rumor, Sell the News’ Trap
• Bitcoin (BTC) Plunges Before the FOMC Meeting, Pi Network (PI) Soars by 15%: Market Watch

BTC Must Hold $98,000

Recent analysis from TeraHash’s analytics division underscores that while Bitcoin’s underlying price trend remains robust, the recent slowdown in momentum is notable. They remarked that should the Federal Reserve maintain its rate decrease policy alongside favorable macroeconomic conditions, Bitcoin could achieve a record high as early as 2026. However, sustaining the price above $98,000 is vital; breaching this support may lead to significant declines in the asset’s value.