5 min readBitcoin has extended its recovery from 80.5k last Friday, rallying to 91k at the time of writing. The largest cryptocurrency trades 4% higher over the past 24 hours and 7% higher this week. However, BTC continues to trade down 17% in November, its worst monthly performance since February.
Bitcoin’s recovery comes amid rising expectations that the Federal Reserve will cut rates in the December meeting. Following weaker data and dovish commentary from several influential Fed officials, the market is pricing in an 85% probability of a 25-basis-point rate cut next month, up from 30% early last week.
The prospect of a lower interest rate environment is beneficial to risk assets such as crypto, as it increases liquidity. US stocks have also rallied into the Thanksgiving holiday, with the Nasdaq 100 rising 5.2% this week.
Sticking with the Fed, the potential appointment of White House Economic Advisor Kevin Hassett as Federal Reserve Chair next year could bolster the bullish macro case, given that he is seen as more inclined toward looser monetary policy. Trump may pick the new Fed Chair before Christmas.
BTC ETFs turn green
While the macro backdrop is looking more encouraging, Bitcoin needs institutional demand to return with vigour to book sustainable gains. BTC ETFs recorded $21.12 million in net inflows on Wednesday, adding to $128.6 million in net inflows on Tuesday. While demand has turned green, it is still significantly below the $1.22 billion in outflows seen just last week.
On a positive note, Texas had become the first US state to buy Bitcoin for its treasury, signaling a bold shift in government adoption. Texas made a $10 million acquisition through BlackRock’s spot BTC ETF as a regulated entry point.
While $10 million represents a small share of state reserves, its symbolic impact is significant. This is the first time a US state has treated Bitcoin as a treasury-level asset, and it could influence how other states approach cryptocurrency in the future.
While the macro and fundamentals are improving, BTC’s recovery depends on ETF and whale demand ramping up to sustain moves higher.
Ethereum flashes signs of recovery
Ethereum has recovered 14 from its 2620 November low to current levels just shy of 3000.
The recovery in Ethereum has been helped by the return of ETF flows. ETH ETFs experienced the fourth straight day of net inflows, with nearly $61 million recorded, adding to $79 million on Tuesday and bringing net inflows to $236 million.
Where next for ETH?
ETH/USDT trades in a falling wedge pattern. The price recovered from the 2620, the November low, to test the 3000 resistance, the falling trendline.
The bullish MACD crossover keeps buyers hopeful of further gains. Buyers need to settle above 3000 to break out of the bullish wedge reversal pattern. A rise above 3,200, the 61.8% Fib retracement level, brings a more stable base for ETH. A rise above here exposes the 200 SMA at 3525.
On the downside, support is seen at 2740, the 78.6% Fib retracement level, ahead of 2500, and the falling trendline of the wedge pattern. A break below here invalidates the wedge pattern.
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