Bitcoin prices climbed to a three-week high on Tuesday in a “much-needed rebound,” prompting traders to “FOMO back in and anticipate higher prices,” according to the blockchain analytics firm Santiment.
Bitcoin (BTC) reached $94,625 on Coinbase in late trading on Tuesday, per TradingView, marking its highest level since November 25.
Santiment reported that this has resulted in a surge of social media posts calling for “higher” and “above” across various platforms.
However, it has since started to decline from that peak, dropping back to $92,400 at the time of writing, leaving analysts speculating on its next move.
“Markets tend to move in the opposite direction of small traders’ actions,” noted Santiment, as this dynamic seems to be playing out in the hours following the monthly peak.
Bitcoin volatility ahead of the Fed decision
The recent increase may face challenges once the Fed meeting occurs on Wednesday, some analysts caution.
The Federal Reserve will announce its interest rate decision on Wednesday, with an 88.6% probability of a 0.25% rate cut, according to CME Group futures markets.
“Bitcoin is likely climbing due to rate cut expectations, but it’s difficult to predict what will transpire after tomorrow’s Fed meeting,” stated Jeff Mei, COO at the BTSE exchange, in comments to Cointelegraph.
Related: BTC poised for December recovery on ‘macro tailwinds,’ Fed rate cut: Coinbase
He warned that any uncertainty regarding future rate cuts could negatively impact Bitcoin and the broader crypto markets. The CME futures prediction market reflects a 21.6% chance of another quarter-point rate cut in January.
“The concern is that the Fed’s outlook may include reluctance to further cut rates or stimulate the economy out of fear of triggering inflationary pressures. This occurred the last time the Fed cut rates, leading to a drop in prices afterward.”
“Any price movement leading up to the FOMC is challenging to interpret because tomorrow [Wednesday] is likely to be very volatile,” agreed analyst “Sykodelic.”
A Bitcoin investor suggests the recent price move was fishy
Long-term Bitcoin investor “NoLimit” informed their 53,000 X followers that the recent surge was “pure manipulation.” That abrupt Bitcoin spike to $94,000 “seems far from organic,” he added.
“People are celebrating, but if you zoom out for even a moment, it has all the signs of a classic engineered pump.”
The analyst pointed out that thin order books allowed prices to be easily pushed up, with large market buys concentrated in a short time, followed by immediate stagnation, “just sudden stalling.”
“This is exactly how major players create FOMO to offload at more favorable prices.”
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