Crypto market shows signs of bottoming out and rebounding? Bitcoin stabilizes at $90K as institutional funds quietly flow back in

In the first week of December, the crypto market showed an impressive recovery after a prolonged consolidation period. Bitcoin quickly reached $91,950 with a 4% increase over 24 hours, while Ethereum rebounded to the $3,000-$3,100 range with a similar 3.5% upside movement. This sudden bounce has significantly shifted market sentiment, but the real question is: can this recovery last, or is it just a temporary respite before larger adjustments?

Liquidation Data Indicates Market Reshuffling

In the past 24 hours, the entire network saw $323 million in liquidations, with short positions reaching $246 million and longs at $77.08 million. Breakdown shows: BTC liquidation at $133 million, ETH at $52.37 million, and SOL at $16.20 million. The largest single liquidation event occurred in Hyperliquid-BTC-USD at $14.57 million.

This data is important because it suggests the market is undergoing a massive deleveraging cycle. According to CryptoQuant analysis, total market open interest has decreased from $45 billion to $28 billion—the largest decline in the current market cycle. This is not a bearish signal; rather, it’s a healthy “leverage washout” that removes excess speculative positions and provides a stronger foundation for the next upward move.

Macro Tailwinds Drive Sentiment Recovery

The macro environment has become significantly bullish for risk assets. US unemployment claims fell to 216,000—the lowest since mid-April—beating market expectations of 225,000. While the PPI slightly increased due to energy prices, core PPI reached 2.6%, the lowest since July 2024, indicating a managed inflation trajectory.

Positive macro data is reflected in a broader market rally: the S&P and Nasdaq hit two-week highs, Dell rose nearly 6%, and tech stocks demonstrate sustained strength. Retail and technology sectors are particularly strong due to holiday spending expectations and positive economic momentum.

For crypto businesses and investors, this macro recovery is critical because it shows that central bank policy environments are no longer destructive to growth assets.

Federal Reserve Rate Cut Expectations: The Game Changer

The pivotal development is the sudden shift in Federal Reserve expectations. The latest Beige Book indicates that US economic activity remains relatively stable, despite slight weaknesses in the job market and managed price pressures. Importantly, some Federal Reserve officials—especially New York Fed President Williams—are openly supporting imminent rate cuts.

JPMorgan has suddenly reversed its forecast and now believes the Fed will start rate cuts in December, overturning their previous view of waiting until January. The latest probabilities are compelling:

• December rate cut probability: 84.9% (25 basis points)
• January rate cut probability: 66.4% for 25 bps, 22.6% for 50 bps

Polymarket data confirms this thesis: 83% probability of a December cut with $173 million in trading volume.

Rate cut expectations are fundamentally bullish for crypto because they signal upcoming liquidity expansion and lower discount rates for future cash flows of risk assets.

Institutional Capital Rotation: ETF Inflows Signal Revival

The most telling sign of institutional conviction is the return of capital flows. The US spot Bitcoin ETF has seen net inflows for two consecutive days totaling $149 million, while the US spot Ethereum ETF also gained $139 million in the same period.

Simultaneously, major institutions are launching new crypto ETF products:

• Grayscale launched XRP and Dogecoin ETFs
• Bitwise officially launched the Bitwise Dogecoin ETF (ticker: BWOW) on NYSE
• Franklin Templeton, VanEck, and others have filed applications for additional crypto products

These coordinated ETF launches and institutional inflows are no accident—they are strategic positioning ahead of the anticipated rate cut cycle. Business dynamics suggest that institutional investors are not abandoning the space; they are repositioning after the adjustment period.

Market Analysis: What’s Next?

The analyst community presents contrasting scenarios:

Bullish Case (4E Lab, Delphi Digital): The current rebound forms an ABC correction structure that requires a break above $103,500 to confirm sustained recovery. The “expectation gap” has normalized from extreme optimism to rational bullish positioning. The combination of policy support, stable capital inflows, and rising sentiment creates a powerful three-factor resonance.

Cautious Case (Matrixport, Wintermute): Rate cut expectations have limited magnitude—($50 bps max in the next two months)—which may be insufficient for a sustained rally. The options market suggests traders expect consolidation in the $85,000-$90,000 range rather than a breakout. Incremental liquidity may still be lacking, and the gold-Bitcoin divergence could persist in the short term.

Moderate Bullish Case (Tom Lee, Mike Novogratz): Bitcoin could test $100,000+ before year-end, despite trading friction in the $95,000-$103,500 range. Market differentiation will increase as crypto policy clarifies and traditional finance players participate more actively.

Alternative Cycle View (Jeff Park, Bitwise): The traditional four-year Bitcoin halving cycle has evolved into a two-year cycle driven by institutional ETF flows and fund manager behavior, compressing bull-bear dynamics.

Critical Question: Sustainable Uptrend or Bounce?

The key differentiator is actual capital inflow strength. Matrixport’s analysis is accurate: while rate cut expectations have risen, actual incremental liquidity lags behind expectations. Bitcoin relies on fresh money inflows, not just price appreciation of existing positions.

The next crucial tests are:

1. December 10 FOMC decision – an actual 25 bps cut is needed, not just expectations
2. ETF flow momentum – inflows must be consistent to suggest institutional re-engagement
3. $100,000 psychological level – a litmus test for buying conviction at higher levels
4. Ethereum relative strength – altcoins must participate to confirm a market-wide recovery

The current recovery appears founded on legitimate macro improvements and reasonable policy expectations. However, sustainability depends on the execution of rate cuts and subsequent capital deployment. The market is no longer in extreme pessimism but has shifted toward cautious optimism—building a deeper foundation for the next rally phase, but still requiring concrete catalysts to accelerate.

For business participants and traders: The current environment signals a shifting risk-reward landscape, but confirmation is still needed before committing fully to a sustained uptrend.