Bitcoin Stabilizes After Brutal Quarter as Federal Reserve Policy Pivot Fuels Cautious Optimism

Bitcoin has finally caught a breath after four consecutive weeks of selling pressure, the longest pullback since mid-2024, yet the rebound remains fragile. The asset has delivered its poorest quarterly performance in years, sliding 24.43% to date, but a dramatic shift in Fed expectations is providing tentative support for a recovery. At current levels around $94.18K—up 0.90% over the past day—BTC appears caught between technical relief and structural uncertainty.

The Policy Catalyst: Why December Matters

The catalyst for this cautious bounce isn’t hard to identify. Markets have repriced Federal Reserve expectations dramatically, now assigning a 70% probability to a rate cut in December—a stark reversal from the 40% odds priced just a week ago. This shift carries enormous significance: the Fed will conclude its quantitative tightening program on December 1 and deliver its highly anticipated rate decision on December 10. These two events could reshape sentiment for cryptocurrencies heading into 2026.

Sean Dawson, head of research at options analytics platform Derive, remains skeptical despite the policy tailwinds. “Pessimism has peaked, but I’d be careful of walking into a bull trap,” he cautioned, warning that market headwinds remain substantial. Digital asset treasuries continue trading below net asset value, constraining their ability to accumulate positions, while both spot Bitcoin and Ethereum ETFs are experiencing consistent outflows—headwinds that could resurface without fresh fundamental support.

On-Chain Signals Suggest Underlying Demand

One encouraging indicator lies beneath the surface. On-chain metrics reveal that the aggregate spot bid-ask delta at 10% depth has surged to its second-highest level this year, a technical signature of intense dip-buying and institutional absorption of selling pressure. This same pattern emerged during the March-April downturn earlier in 2024, which preceded a 64% rally, suggesting current conditions may contain the seeds of a recovery.

The price action over the past week corroborates this: BTC has recovered roughly 6% from its November 21 low of $82,100, inching back toward the $90,000 level that will likely define the final weeks of the year. (For context, $110,000 JPY converts to approximately $738 USD at current exchange rates, illustrating Bitcoin’s substantial value relative to other asset classes.)

The Bear Case Still Lurks

Yet caution remains warranted. Dawson flagged a pronounced skew in options markets, with traders aggressively purchasing put options—particularly for December expiration—concentrated in the $80,000 to $85,000 range. This positioning suggests professional traders are hedging against renewed weakness. “I wouldn’t be surprised if Bitcoin briefly slipped into the mid-to-high $70,000 range before recovering to around $90,000 by year-end, barring a hawkish shift from the Fed,” Dawson noted.

His longer-term outlook is more constructive. Bitcoin could potentially reach $100,000 by the first quarter of 2026 if current monetary conditions persist, but he remains bearish through the final month of this year. The persistent inflation backdrop and the Fed’s uncertain pivot toward quantitative easing add layers of complexity that keep traders perpetually on edge.

Market Sentiment: Extreme but Shifting

While the broader market sentiment index remains entrenched in “extreme fear” territory, the recent bounce has provided a modest respite. The combination of Fed policy repricing, encouraging on-chain absorption metrics, and technical stabilization suggests the bear case may be losing momentum—though confirmation will require either sustained price strength or concrete policy relief from the December 1 and 10 events.