The intense selling pressure that has weighed on Bitcoin in recent weeks appears to be easing, fueling hopes that the cryptocurrency's steep decline may be nearing its bottom.
Bitcoin held steady around $88,000 on Tuesday, rebounding from a seven-month low. The earlier sell-off triggered massive liquidations and wiped over $1 trillion from the crypto market's total value.
Trader sentiment remains cautious, reflecting lingering fragility. Bitcoin is still on track for its worst monthly performance since 2022, while Bitcoin ETFs may record their largest monthly outflows since launch. However, after this modest rebound, some see reasons for optimism.
In the options market, the cost of downside protection has dropped significantly. Caroline Mauron, co-founder of Orbit Markets, noted:
"The premium for one-week put options over calls has fallen from 11%—a 2025 high—to around 4.5% since last Friday. This suggests stress levels have eased significantly, and investors believe we may have found a near-term bottom."
Still, markets are expected to remain in wait-and-see mode ahead of the Federal Reserve's decision.
Long-term holders who sold above $100,000 now view current levels as too low to justify further selling and are returning to a holding stance. Meanwhile, accumulation-minded investors are waiting for Bitcoin to dip below $85,000 again.
Another key indicator, Bitcoin’s 14-day Relative Strength Index (RSI), currently sits at 32 after a sharp drop in early October. An RSI of 30 or below typically signals oversold conditions, while 70 or above indicates the opposite. At the same time, Bitcoin options' implied volatility—a measure of expected price swings—has retreated to April levels, when tariff-related news triggered a sell-off.
Noelle Acheson, author of the "Crypto is Macro Now" newsletter, observed:
"This suggests traders are bracing for a breakout move, potentially in either direction. But option skew shows bets on a rebound from current levels are strengthening compared to further downside."
Data shows global crypto exchange-traded products (ETPs) have seen over $6 billion in outflows in November—the largest monthly withdrawal since records began in 2018. Despite this, most investors have held their positions. U.S. Bitcoin ETFs recorded $3.7 billion in outflows this month, about 3% of their total $110 billion in assets under management.
According to S3 Partners LLC, short interest in BlackRock’s Bitcoin ETF (IBIT) has declined sharply.
Rachael Lucas, an analyst at BTC Markets, noted that Monday’s subdued trading volume could also signal waning selling pressure. She estimates Bitcoin’s short-term support at $80,000, with resistance between $90,000 and $95,000.
As investors grapple with concerns over a cooling U.S. labor market and heavy AI-related capital expenditures by big tech, Goldman Sachs’ risk appetite indicator shows speculative assets—including Bitcoin—are under increasing strain. Such a sharp pullback reflects fading risk appetite and, in extreme cases, may even suggest excessive market declines. Goldman strategists wrote:
"Elevated equity valuations and crowded long positions leave markets more vulnerable to shocks, particularly in retail-driven segments like unprofitable tech stocks."
U.S. tech stocks led a global equity rally on Monday as traders entered a data-heavy week. Interest rate futures now price in an 80% chance of a Fed rate cut in December, up from just 42% a week ago. Fed officials remain divided on whether to cut again after reductions in September and October.