Bitcoin selling pressure has now eased, indicating that the market is betting that the current round of decline is coming to an end.

In recent weeks, the heavy selling pressure on Bitcoin that has been causing pressure seems to be easing, sparking hopes in the market that this brutal downturn is nearing its end. As of the writing of this article on Tuesday, Bitcoin was hovering around $88,000, showing some recovery from its slump to a seven-month low. The recent sharp drop in Bitcoin has triggered massive position liquidations and led to the evaporation of over $1 trillion in the entire digital asset market. Trader sentiment remains cautious, highlighting the market's fragile state. Bitcoin is still on track to post its worst monthly performance since 2022, and exchange-traded funds (ETFs) investing in the token appear to be facing their most significant monthly outflows since their launch. However, after a slight rebound in Bitcoin, some see reasons for optimism. Caroline Mauron, co-founder of Orbit Markets, stated that the cost of purchasing downside protection in the Bitcoin options market has considerably decreased, with the premium of one-week put options relative to call options dropping from a high of 11% last Friday to around 4.5%. She said, "This indicates that the market tension has significantly decreased, and investors are expecting that the bottom has been reached." Another noteworthy indicator is Bitcoin's 14-day Relative Strength Index, which, after a sharp decline since early October, is currently at 32. The index usually indicates oversold conditions when below 30 and overbought conditions when above 70. At the same time, the implied volatility of Bitcoin options - a measure of expected price fluctuations in the future - has returned to levels seen in April when tariff news triggered a sell-off. Noelle Acheson, author of the "Crypto is Macro Now" newsletter, stated, "This indicates that traders are positioning for a breakout. The direction of the breakout could be either up or down. However, the options skew shows that the intensity of betting on further declines is diminishing relative to betting on an increase from the current level." Data shows that over $6 billion in outflows from global cryptocurrency exchange-traded products have occurred in November, making it the most severe monthly outflow recorded since 2018. Despite this, investors are generally still on the sidelines. The US Bitcoin ETF saw redemptions totaling $3.7 billion in November, accounting for about 3% of its $110 billion in assets under management. According to a report by S3 Partners LLC, short interest in BlackRock's Bitcoin fund (IBIT) - measured by the dollar value of stocks sold short - has significantly decreased. BTC market analyst Rachael Lucas pointed out that Bitcoin's subdued trading on Monday may indicate that selling pressure is waning. She sees $80,000 as the recent bottom, with $90,000 to $95,000 acting as resistance levels for any meaningful rebound. The renewed expectations of a rate cut by the Federal Reserve are a significant factor driving the rise in asset prices such as stocks and Bitcoin. Federal Reserve Governor Christopher Waller stated on Monday that he advocates for a rate cut at the December interest rate meeting because he is more concerned about the ongoing weakness in the US labor market, which is related to the Fed's dual mandate. San Francisco Federal Reserve President Daly also expressed support for a rate cut at the December meeting, citing a higher possibility of a sudden deterioration in the job market than a sharp rise in inflation, which would be more challenging to deal with. Some analysts believe Daly's remarks are significant as she rarely deviates from Federal Reserve Chairman Powell's position in public. According to the latest CME "FedWatch" data, the probability of a 25 basis point rate cut by the Federal Reserve in December is 80.9% (69.4% on November 24), with a 19.1% probability of rates remaining unchanged. The probability of a cumulative 25 basis point rate cut by January next year is 64.5%, with a 14.0% probability of rates remaining unchanged and a 21.5% probability of a cumulative 50 basis point rate cut. Caroline Mauron said, "The market will be in a wait-and-see mode until the Federal Reserve makes a decision. Long-term holders who liquidated positions above $100,000 believe that the current level is too low to sell and have returned to holding mode, while those looking to establish new positions may try to wait for the price to drop below $85,000 again."