Bitcoin Rebounds After Fed Rate-Cut Sell-Off: A Comprehensive Analysis
Bitcoin #BTC rebounded to $102,000 on Thursday after a 5.5% drop prompted by the Federal Reserve's aggressive interest rate reduction. Recent market activity highlights significant interest from whales, corporations, and institutional investors, who seized the opportunity to accumulate Bitcoin during its dip below $100,000. However, traders are advised to remain cautious, as profit-taking signals emerge from Bitcoin’s Network Realized Profit/Loss (NPL) indicator.
Market Reaction to Fed's Rate Decision
The Federal Reserve announced a rate cut at Wednesday's FOMC meeting, lowering the federal funds rate to a range of 4.25%–4.50%. This move, coupled with projections of slower rate reductions in 2025, triggered a sell-off in riskier assets like Bitcoin.
Despite this, institutional players and large-scale investors used the price drop as an opportunity to increase their Bitcoin holdings. Data from Lookonchain revealed that Marathon Digital (MARA) purchased 1,627 BTC worth approximately $166 million. Similarly, three whale wallets collectively acquired 1,153 BTC valued at $120 million.
Strategic Moves by Corporations
Hut 8 Corp (HUT), a prominent Bitcoin miner and energy infrastructure company, made significant purchases, acquiring 990 BTC at $101,710 per coin, totaling $100 million. This acquisition raised Hut 8’s strategic Bitcoin reserve to over 10,000 BTC, worth more than $1 billion.
Institutional Demand on the Rise
Institutional interest in Bitcoin continues to grow. On Wednesday, Coinglass reported an inflow of $272.3 million into Bitcoin spot Exchange Traded Funds (ETFs), marking the continuation of a bullish trend that began on November 27. If these inflows persist or intensify, they could provide substantial support to Bitcoin prices in the face of market fluctuations.
Bitcoin Price Outlook
Bitcoin tested the $100,000 support level on Wednesday, briefly dipping below it during Thursday's early Asian session. However, the cryptocurrency rebounded to $102,000 during the European trading hours, showcasing resilience in the face of market volatility.
Key Takeaways for Traders
While Bitcoin’s recovery above $100,000 is a positive sign, traders should exercise caution as the NPL indicator suggests potential profit-taking in the near term. The combination of institutional demand and strategic acquisitions by major players may act as a buffer, but market participants should remain vigilant and closely monitor future price movements.
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