Bitcoin Under Pressure: Technical Warning Signals and Fed Decision in Focus

Bitcoin Struggles at Key Support Zone

The Bitcoin market is in a critical phase. After a brief plunge below $88,000 over the weekend, the leading cryptocurrency managed to stabilize above $91,500 ^[2], yet analysts warn of further price declines.

Crypto analyst Daan Crypto Trades identifies the 0.382 Fibonacci retracement zone as crucial support. "I think this is a key area that the bulls need to defend," he explains. A breakdown could send Bitcoin tumbling to April lows around $76,000 ^[2].

Fed Decision Could Become Bull Trap

All eyes turn to the U.S. Federal Reserve this week. While a 0.25 percentage point rate cut is widely expected ^[2][4], on-chain data from the past two Fed cuts reveals a concerning pattern: prices rose a few days before announcements, only to fall just as quickly afterward ^[1].

Two factors prove decisive: the number of stablecoins on exchanges and funding rates. Both indicators typically decline following interest rate announcements, warns analyst XWIN Research Japan ^[1].

Markus Thielen of 10x Research emphasizes that crypto markets have lost momentum since the October rate cut. "With already depressed volumes and negative ETF flows, upside participation remains thin, while the $70,000 to $100,000 range holds for BTC," he explains ^[2].

Troubling Parallels to 2022

Current on-chain data sends additional warning signals. Approximately one quarter of all Bitcoin is currently underwater – the highest level in over a year ^[3]. A similar dip below the 0.75 quantile marked the beginning of the last bear market in early 2022.

Total loss supply has reached 7.1 million Bitcoin on a 7-day average basis, matching the upper end of the range observed in early 2022 ^[3].

Moreover, ETF demand continues to weaken. The iShares Bitcoin Trust (IBIT) has recorded outflows for the sixth consecutive week – the longest negative streak since its January 2024 launch ^[3].

Traders Remain Cautiously Optimistic

Despite the warning signals, some positive voices emerge. Henrik Andersson of Apollo Capital remains cautiously optimistic for the coming year: "With the change in Fed leadership in May next year, we will likely see more rate cuts in 2026, which should support risky assets, including crypto" ^[2].

Crypto analyst Michaël van de Poppe expects an initial pullback to $87,000 driven by FOMC nervousness, followed by a quick recovery. He identifies $86,000 as the critical level for bulls ^[4].

Beyond the Fed's decision on Wednesday, the central bank's forward guidance will prove crucial for the price trajectory ahead, potentially setting the direction for the coming months ^[2].