Bitcoin at $90K: Is the market ready for the holiday rally? What you need to understand this week

The second week of December has brought Bitcoin (BTC) back above $90,000, reopening debates about the possibility of a festive rally in the last days of the year. With the current price hovering around $90.22K and volatility characteristic of these last quarters, traders find themselves at a crossroads between optimism and caution. While consensus points toward critical Federal Reserve decisions, the dominant question in conversations is whether this will be the week that determines BTC’s fate until the end of the year.

The derivatives market reflects “strategic apathy”

One of the most revealing signals comes from Bitcoin derivatives market data. Open interest (OI) has fallen to levels not seen since April, when BTC was trading around $75,000. This decline presents two possible interpretations: total investor capitulation or, more likely, a kind of market “wait-and-see” stance.

What’s notable is that, despite the recent rebound from the lows of $80,500, traders have not felt motivated to increase their leveraged positions. This moderation in derivatives use is, paradoxically, good news for bulls. Historically, when leverage remains controlled and participation is low, conditions become favorable for sustained upward movements. Systemic risk is significantly reduced when markets are not overheated by excessive positions.

Fibonacci resistance: The line that defines the next move

Technical analysts have identified a critical zone at around $84,000, a Fibonacci retracement level representing 38.2% of the full upward move from previous lows. This level is not just any support: it essentially represents the last major bastion before the entire long-term market structure would break, leading to a retest of April’s lows.

For bulls, holding this line is crucial. Above it, the next target is set around $95,500, where several short-term exponential moving averages converge. Traders are closely monitoring both zones, though many acknowledge that BTC lacks a “clear” base to build sustained long positions in the medium term.

What awaits Bitcoin after the Fed decision?

The Federal Reserve will meet on Wednesday to decide on interest rate changes, with markets pricing in a 25 basis point cut. However, this situation is more complex than it appears.

Recent employment data indicate deterioration: non-farm payrolls have fallen in 5 of the last 7 months, the worst streak in at least 5 years. This pushes the Fed toward additional cuts. But here’s the dilemma: inflation remains above target, complicating any monetary easing decision.

If the Fed proceeds with the cut (as many expect), the impact could be profound. An environment of lower rates and lax financial conditions would align with an economy still showing signs of growth. This combination has historically been bullish for risk assets, including cryptocurrencies. The post-announcement speech by Chairman Powell will be decisive in gauging how dovish the institution will remain toward the end of the year.

The 2022 cycle repeats: Is $89K the new inflection point?

An interesting comparison emerges when overlaying Bitcoin price charts from this year with those from 2022-2023. In December 2022, after an 80% drop from previous all-time highs, BTC bottomed at $15,600. The recovery began immediately in 2023, leading to years of sustained gains.

Today, with the analogy in mind, analysts suggest that the $89,000 level could represent a similar inflection point. If cycles repeat faithfully, the long-term bottom would already be completed or very close to completion. This would mean that the coming weeks could mark the start of a new bullish impulse extending well into 2026.

The correlation of BTC price with the 2022 pattern has reached extraordinary levels on monthly timeframes, hitting 98% in recent analyses. Although correlations do not guarantee future results, the parallel is too striking to ignore.

Reality or fiction: Year-end rally?

The debate over the “Santa rally” remains polarized. Some analysts hold a historical view: Bitcoin tends to align its bullish moves toward year-end more often than it fails. Seasonality suggests that the market deterioration this year could mirror 2022, pointing to an imminent rally.

However, other market academics take a more pessimistic stance. They argue that 2025 has already accumulated 171 days of negative trading, well above the annual average of 170 days. If true, the year-end is likely to be sideways, with any deeper decline reserved for 2026.

The key lies with the Fed. The outcome of its Wednesday decision could very well be the catalyst tipping the scales one way or the other. A more dovish Fed in relaxed financial conditions would fuel optimism; a more hawkish tone would dampen it.

What to watch this week

Low open interest and moderate leverage create a scenario where bulls have less systemic weight against them. The $84,000 Fibonacci zone remains the key psychological support. A weekly close above $90,000 would confirm that the bullish structure remains intact, while a drop below $87,000 would reopen discussions about testing the $80,000 levels.

With the Federal Reserve meeting dominating the weekend’s fiscal focus, Bitcoin will remain a risk asset sensitive to macroeconomic winds. The next 72 hours will be decisive.