Can the Fed's "moderate easing" save the market? Bitcoin repeatedly tests the $90,000 mark, with death cross signals sounding the alarm

Year-End Liquidity Crisis, Bitcoin Stalls

Entering the second week of December, Bitcoin fluctuated around $91,630, with noticeably low market participation. The rebound momentum that appeared over the weekend was quickly dissipated during Monday’s US stock market open, and the price then repeatedly tested this critical level. Behind this sense of helplessness is a liquidity vacuum caused by year-end de-risking pressure and the absence of institutional funds.

Rising bond yields and a weak stock market create dual pressure, generally impacting risk assets. Not only Bitcoin, but Ethereum also declined, moving in tandem with the broader market trend. However, in terms of relative performance, Ethereum’s recent strength indicator against Bitcoin reached a one-month high, indicating some structural bright spots amid a weak market.

Other individual cryptocurrencies like privacy-focused Zcash ($496.01, +0.50%) and institutional-grade blockchain Canton Network showed counter-trend performance, recording double-digit gains. But overall, according to the CoinDesk 20 index, the crypto market still declined by 0.8%, with a market cap of $3.08 trillion, down about 1% from yesterday.

Market Has Already Priced in Rate Cuts; Key Is Fed Guidance

This Wednesday’s Federal Reserve meeting has become the market’s focal point. According to FedWatch data, traders are pricing in nearly a 90% probability of a 25 basis point rate cut. But there is an important distinction—the rate cut itself has been fully digested by the market, and the real source of volatility may come from the Fed’s language regarding future policy paths.

Polymarket’s prediction market data offers interesting insights: traders have fully absorbed this week’s rate cut expectations and generally expect a pause in rate cuts in January. This implies the market is pricing in a “shallow, limited easing cycle,” rather than the aggressive, continuous rate cuts seen last year.

A CEO of a Singapore-based exchange pointed out deeper divergence: “Policy signals among central banks are increasingly inconsistent. The Bank of England’s internal opinions are divided, the European Central Bank is hawkish, the Bank of Japan is preparing to tighten policy at levels not seen since 2007, and trade tensions among major Asian economies are escalating.”

In other words, the asynchronous global policy stance has become a more significant risk factor than rate hikes or cuts themselves.

Perpetual Contract Liquidation Improves Market Structure

A positive signal comes from exchange data. According to QCP’s report, since October, open interest in Bitcoin and Ethereum perpetual contracts has decreased by nearly 50%. While this might seem like a negative activity indicator, it actually reflects a “structural reset”—excess leverage positions have been cleared, crowded trades eliminated, making remaining long positions more solid.

After this cleanup, Bitcoin was able to approach $91,600 again without the risk of forced liquidation. While not an impressive rally, it at least indicates the price is operating within a healthier market structure.

Signs of Structural Weakness Emerge

Despite Bitcoin’s rebound from November lows, some analysts have issued warnings. They point out that Bitcoin is facing a dual dilemma of structural weakness and declining spot demand.

The most direct evidence comes from the flow of US spot Bitcoin ETFs: recent persistent net outflows suggest that large institutions are not increasing their holdings during the rally, but rather are selling into strength. This phenomenon is confirmed by the significant negative delta in the cumulative volume delta (CVD) on major exchanges.

More concerning data includes:

• Over 7 million BTC are in unrealized loss, a scenario last seen during the 2022 bear market bottom
• Although net realized capital inflows remain positive (monthly average of $8.69 billion), they have fallen sharply from historical peaks, weakening buffers against downside risks
• Weak spot demand has significantly reduced buying support, increasing market sensitivity to external shocks and macro changes

Analysts warn that these factors together indicate rising fragility in the year-end market.

Technical Warnings: Death Cross Confirmed

On the technical front, warning signals are flashing.

Bitcoin has confirmed a death cross—the 50-day exponential moving average (EMA) has fallen below the 200-day EMA, with the warning formed on November 16 now officially confirmed. The price is currently below the 50-day moving average, indicating strong bearish control.

Composite technical indicators also signal bearishness:

• Ichimoku Cloud shows a short-term bearish alignment, even if the price rebounds, lacking optimism
• Average Directional Index (ADX) at 32.9 indicates a strong trend (above 30), with a clear downward direction
• Relative Strength Index (RSI) at 44.26 remains neutral—neither oversold enough to attract bottom-fishing nor overbought to trigger profit-taking, leaving the market in a state of uncertainty

The only bullish sign comes from Momentum indicator’s bullish impulse, hinting that within this compression zone, bulls and bears are about to clash, and the price may attempt to break through resistance levels established over the past few weeks.

Ghost of Crypto Winter Reappears?

Overall, the crypto market’s fear and greed index has risen to 24 (“Fear” zone), easing from the “Extreme Fear” level (index 10) when Bitcoin neared $80,000 at the end of November. Market cap remains above $3 trillion, providing a defensive line for the optimistic camp.

However, both Bitcoin and Ethereum have confirmed death crosses. Historically, death crosses often signal the start of a downtrend. If history repeats, the crypto winter may not be just alarmist talk.

There is also a reason for hope: in this cycle, previous death crosses have sometimes marked local bottoms rather than cliffs. The conclusion remains to be further validated.

The macro variable to watch is whether Fed rate cuts will be enough to reverse the technical damage. In theory, lower interest rates should make risk assets like Bitcoin more attractive compared to bonds, but whether this “liquidity tailwind” can overcome bearish technical signals remains to be seen over time.

Key Levels and Market Outlook

Bitcoin has gained 3.27% over the past 7 days, reaching a high of $92,296 on Tuesday, with support at $89,618. Although volatility is limited, it reflects that bears still exert strong control at these key levels.

Important technical levels:

• Resistance:
  • $99,036 (recent key resistance)
  • $105,000 (strong resistance at the 200-day moving average)
• Support:
  • $82,084 (recent support)
  • $68,384 (strong support level)

Final Thoughts

The market’s next move will depend more on how traders interpret Fed guidance and the divergence among global central banks than on the rate cuts already priced in. If the Fed signals hawkishness or tightens expectations further, it could amplify downside pressure on crypto markets. Conversely, if financial conditions ease further or the dollar weakens, it could bring real tailwinds for crypto assets.

In a context of thin liquidity, declining spot demand, and weakening technicals, caution and prudence are the most appropriate attitude right now.