Did BTC's Santa Rally Begin at $89K? Key Insights for Bitcoin This Week

This week, Bitcoin is navigating a crucial price zone in the low $90,000s. Despite traders anticipating another price dip, there is speculation about a potential "Santa rally" in the stock market, which could influence Bitcoin’s performance. The upcoming Federal Reserve's decision on interest rates is central to these developments, with charts and analysis highlighting key Fibonacci levels and market trends.

Key Takeaways

Bitcoin is currently facing resistance in the low $90,000 range but traders are expecting a possible dip.
The Federal Reserve's interest rate decision this week is expected to impact both stocks and cryptocurrencies.
Seasonal analysis indicates that Bitcoin could follow a similar pattern to its 2022 performance.
Current levels of open interest and leverage in Bitcoin markets are low, suggesting cautious investor sentiment.
Market analysts observe that $89,000 may mirror past price behavior, hinting at potential gains for bullish investors.

Did BTC's Santa rally start at $89K? 5 things to know in Bitcoin this week

Bitcoin's Price Dynamics: Key Resistance Levels

Bitcoin's price activity is concentrating around a significant resistance level in the low $90,000s, even though traders foresee another potential dip. Economic uncertainty and the upcoming Federal interest rate decision cast a shadow over risk assets.

Market sentiment suggests that the Fed's decision will heavily influence whether a "Santa rally" for stocks will occur. For Bitcoin, current seasonal trends indicate that this year may reflect the timing of the “bear market” bottom observed in 2022. Open interest and leverage are subdued, creating conditions that might favor bullish investors.

BTC/USD one-hour chart. Source: Cointelegraph/TradingView

Fibonacci Levels as Price Support

Bitcoin's volatility returned just before the weekly close, a trend that has been increasing this quarter. After a dropping to around $87,000, Bitcoin managed to close the week near $90,000 before experiencing further fluctuations.

Traders are cautious about potential false breakouts in either direction. Analyst CrypNuevo suggested the possibility of retesting the 50-day exponential moving average (EMA) around $95,500, exploring a potential short position if Bitcoin reaches that mark. He noted that there needs to be a firmer support structure for long positions, especially with low $80,000 still being a viable target.

BTC/USD one-day chart with 50EMA. Source: Cointelegraph/TradingView

Market analyst Michaël van de Poppe noted significant buying pressure could lead to a break above $92,000 in the coming days. Conversely, trader Daan Crypto Trades highlighted Fibonacci retracement levels, pointing out that bulls should hold the $84,000 support seen earlier this month.

BTC/USD one-week chart with Fibonacci retracement levels. Source: Daan Crypto Trades/X

Focus on the Federal Open Market Committee (FOMC)

With limited U.S. macroeconomic data scheduled for release, all eyes are on the Federal Reserve this week. The FOMC meeting on Wednesday will likely decide on a 0.25% interest rate cut, as market observers have suggested.

Recent employment data indicates challenges in the labor market, increasing pressure to lower rates. Some sources report a sharp decline in nonfarm payrolls over recent months, which adds complexity to the Fed's situation.

Fed target rate probabilities for Dec. 10 FOMC meeting (screenshot). Source: CME Group FedWatch Tool

Analysts from Mosaic Asset Company suggest that steady inflation and a resilient economy could support another round of rate cuts, potentially positioning the stock market favorably in relation to upcoming interest rate adjustments.

Possibility of a 'Santa Rally' in Crypto

Amid the talk of a bullish December for stock traders, there are also expectations for the “Santa rally” effect on Bitcoin. While the rally in stocks appears imminent, Bitcoin has underperformed in the fourth quarter, despite the S&P 500 nearing all-time highs.

Economist Timothy Peterson noted that Bitcoin tends to benefit during year-end rallies, although some analysts maintain skepticism about a strong surge this year.

Bitcoin seasonality chart. Source: Timothy Peterson/X

Joao Wedson from Alphractal pointed out that Bitcoin could see a lackluster finish to 2025, emphasizing historical patterns where Bitcoin may spend considerable periods declining.

Historical Comparisons Suggest an Optimistic Outlook

Recent insights indicate that Bitcoin's price cycles align closely with past trends. Comparison charts illustrate that this year's performance may see a bottom at around $89,000, similar to the $16,000 low experienced previously.

Historically, Bitcoin's price rebounded significantly after reaching lows, with investors possibly just weeks away from a similar upward trend if the past repeats itself.

BTC price comparison. Source: Timothy Peterson/X

Open Interest Highlights Cautious Investor Sentiment

A notable point from the Bitcoin derivatives market indicates a decline in open interest, which has now reached its lowest level since April when Bitcoin was trading at $75,000.

This decrease in open interest may suggest either investor capitulation or apathy, as the market remains cautious. Despite recent price rebounds around $80,500, traders have refrained from aggressive leverage positions, reflecting a more conservative market approach.

Bitcoin open interest. Source: CryptoQuant

CryptoQuant also noted a significant drop in leverage ratios, potentially reducing systemic risks within the market, as traders seem to be managing expectations following the recent price recovery.

Bitcoin estimated leverage ratio. Source: CryptoQuant