Bitcoin is finding room to rebound, but not yet the fuel to run.
The macroeconomic backdrop has improved just enough to give the bulls something to work from. Slowing headline inflation has boosted expectations of three rate cuts this year, reviving the familiar scenario that looser monetary policy supports risky assets.
And it could signal the possibility of a gradual return of liquidity after months of tight financial conditions for crypto markets.
But be careful not to read too much into this change. The Federal Reserve is unlikely to embark on an aggressive easing cycle. Instead, it seems better to take a measured approach aimed at gradually rebuilding liquidity. This creates an environment where Bitcoin can stage tactical rallies while having difficulty sustaining them.
Bitfinex analysts describe the market as being prone to movements in waves rather than sharp breakouts.
“In this environment, volatility remains likely,” the company said in a note shared with CoinDesk. “Tactical bullish moves can occur when positioning becomes too defensive, but sustained structural advance will require clearer confirmation of macro-disinflationary trends and sustained spot demand.”
Spot recoveries continue to encounter steady sales. Each rebound is absorbed more easily than at the start of the quarter, which suggests some stabilization.
The Night Tape is a good example. Bitcoin traded as high as $68,500 before flipping during the US afternoon and sliding below $66,000, a move that aligned with a stronger dollar and hawkish minutes from the Fed. This type of intraday reversal is the market’s way of saying that rallies are still fragile and that traders are quick to sell as soon as macroeconomic conditions become even slightly less favorable.
“Alarmingly, Bitcoin’s momentum mirrors the recent strengthening of the dollar. Once investors become convinced that the rising dollar is a trend, there could be a sharp increase in volatility,” said Alex Kuptsikevich, chief market analyst at FxPro, in an email.
“Volatility appears to have been muted in this market, while stock indexes are much more dynamic. There, investors are actively buying the dips, relying on support in the form of important moving averages: 50 days for the Dow Jones and Russell 2000 and 200 days for the Nasdaq100. The crypto market is now below its 50 and 200 day lines by 17% and 31%, respectively,” he added.
Meanwhile, sentiment remains fragile as a crypto fear gauge has printed single digits in nine of the last fourteen days, territory rarely seen outside of previous cycle lows.
At the same time, stablecoin outflows from major exchanges indicate tightening liquidity, and long-term holders have shown signs of stress comparable to the late stages of the bear market in 2022, according to Glassnode.
For now, Bitcoin appears caught between improving macro optics and stubborn supply. A tactical increase remains possible, particularly when the positioning is too defensive.
However, sustained progress will likely require clearer evidence of disinflation, a weaker dollar and consistent cash demand. Until then, the path to the top may be uneven.
