Bitcoin Logs Longest Losing Streak Since 2024 as Fed Repricing Fuels Cautious Rebound
News Summary
Bitcoin has logged its fourth consecutive weekly loss, marking its longest downtrend since June 2024. Despite a recent rebound, its fourth-quarter performance is on track to be its worst since 2018, with a current loss of 24.43%. Options traders are hedging against further downside, with significant put option accumulation in the $80,000 to $85,000 range, and analysts anticipate continued market turbulence leading into Christmas. Despite the prevailing gloom, a key on-chain metric—the aggregate spot bid-ask delta at 10% depth—has spiked to its second-highest level in 2025, suggesting increased dip-buying activity and potential absorption of selling pressure. Historically, similar spikes have preceded market bottoms and catalyzed significant rallies. Bitcoin is currently trading around $87,400, up approximately 6% from its recent low. This recovery aligns with a sharp repricing of Federal Reserve policy, as odds of a December rate cut have jumped from 40% last week to nearly 70%. However, analyst Sean Dawson remains skeptical of the rebound, warning of a potential “bull trap” and noting that fears of “sticky inflation” could lead to a slower transition into quantitative easing than previously expected. He forecasts Bitcoin could briefly slip into the mid to high $70,000 range before recovering to around $90,000 by year-end, contingent on the Fed avoiding a hawkish tone. The Federal Reserve's conclusion of quantitative tightening on December 1 and its interest rate decision on December 10 are highlighted as pivotal events.
Background
Bitcoin, as the world's largest cryptocurrency, has historically seen its price movements significantly influenced by macroeconomic factors, particularly U.S. monetary policy. In 2025, amidst global inflationary pressures and the Federal Reserve's adjustments to its monetary policy, the Bitcoin market has experienced considerable uncertainty. The Federal Reserve's interest rate decisions and the process of quantitative tightening (QT) directly impact market liquidity and investor risk appetite. Expectations of rate cuts generally boost risk assets, while tightening policies tend to exert pressure. Against the backdrop of President Donald Trump's re-election, markets also remain attentive to potential impacts from fiscal policy and regulatory environments, although this article primarily focuses on monetary policy.
In-Depth AI Insights
What are the true underlying drivers behind Bitcoin's extended losing streak, and can a rebound fueled solely by Fed policy repricing be sustained? While Fed policy repricing serves as a short-term catalyst, Bitcoin's prolonged downtrend stems from deeper structural market weaknesses and institutional caution. - The significant accumulation of put options in the options market indicates strong institutional hedging demand, rather than aggressive long positioning. - Analyst Sean Dawson's observation that most digital asset treasuries are trading below their net asset value limits their accumulation capacity, reflecting internal industry funding pressures and a lack of confidence. - Fears of "sticky inflation" imply that even if the Fed cuts rates, the pace of quantitative easing might be slower than market expectations, which would continuously suppress risk asset valuations and expose any rebound to "bull trap" risks. How might the Federal Reserve's December policy decisions (end of quantitative tightening and interest rate resolution) impact the crypto market beyond short-term volatility, extending into long-term effects? The Fed's policy combination will be critical in shaping the long-term trajectory of the crypto market, not just short-term price fluctuations. - The conclusion of quantitative tightening (QT) could signal the end of the liquidity crunch cycle, offering the market some breathing room. However, if "sticky inflation" persists, the Fed might be compelled to maintain higher rates for longer or reconsider tightening in the future, presenting a long-term headwind. - While rate cuts themselves might boost risk assets, the crucial factor is the magnitude and frequency of cuts, and the underlying assessment of economic fundamentals. If cuts are driven by significant economic slowdowns, corporate earnings would be under pressure, meaning risk assets might not sustain rallies even with improved liquidity. - Markets will closely scrutinize the Fed's forward guidance on its policy path. Any signals regarding a "slower transition into quantitative easing than previously expected" could become a structural challenge for the crypto market in the coming months. Given the analyst's forecast of short-term downside and long-term recovery, how should institutional investors strategically adjust their allocations in the cryptocurrency space? This co-existence of short-term pessimism and long-term optimism demands a more nuanced and agile strategy from institutional investors. - In the short term, institutions should prioritize risk management and hedging strategies, for instance, by utilizing the options market to hedge against downside risks or reducing volatility exposure in short-term positions to navigate potential "bull traps" and year-end selling pressure. - For long-term allocations, potential dips should be viewed as opportunities to accumulate quality assets, but accumulation should be phased, avoiding single, large-block purchases. Focus on crypto projects with strong fundamentals and clear use cases, rather than purely speculative assets. - Crucially, maintain a close watch on the Fed's actual actions and economic data, rather than solely relying on market expectations. If the Fed's hawkish stance persists or economic data deteriorates, the long-term recovery timeline may need reassessment, making strategic flexibility paramount.