The price of Bitcoin recovered above 86,000 as liquidity concerns eased and the Federal Reserve focused.

The price of Bitcoin recovered from 83.5 thousand yesterday to over 87 thousand.
Concerns about the unwinding of yen carry trades affected Bitcoin on Monday.
The rise in Bitcoin's price is due to a strong auction of Japanese bonds and the liquidity of the Federal Reserve overnight.
The Federal Open Market Committee meeting next week will be pivotal.
Bitcoin exchange-traded funds see inflows of $3.48 billion in November.
Technical analysis for the BTC/USDT pair.

The price of Bitcoin rises above 87,000 after a volatile start in December, when the largest cryptocurrency fell by 7% to 83,500 amid a renewed bout of risk aversion, before recovering to stabilize above 86,000.

Yesterday's sell-off marked the latest decline in a bearish trend that has dominated November, a month that is typically bullish for cryptocurrencies. In contrast, the monthly drop of 17% represented the worst monthly sell-off in four years. Furthermore, the seasons suggest that November will be red, which is often followed by a red December.

Concerns about the decline in Japanese yen trading triggered yesterday's drop. The hawkish statements from Bank of Japan Governor Ueda boosted expectations for a rate hike this month, while Japanese government bond yields surged sharply, with the 10-year Japanese government bond yield reaching its highest level in 17 years. This raises concerns about repatriating capital to Japan, leading to a withdrawal of liquidity from the market. Cryptocurrency and technology stocks are particularly sensitive to liquidity flows. The Nasdaq index, dominated by the technology sector, closed lower. The Bank of Japan raised interest rates in March 2024 and July 2024. After each increase, the price of Bitcoin fell. The odds of a hike in December are 81%.

Liquidity fears are currently easing.
However, it is worth noting that the success of the Japanese bond auction last night helped to ease these concerns, at least for the time being. Furthermore, the Federal Reserve ended its quantitative easing program yesterday and injected liquidity worth $13.5 billion into the financial system last night, which may support Bitcoin prices.

Simultaneously with the Federal Reserve's decision, the weak data from the US Manufacturing Purchasing Managers' Index yesterday contributed to supporting expectations for a rate cut. The market expects an 87% chance of a rate cut next week. The Federal Open Market Committee meeting (FOMC) in December could be crucial for the trajectory of Bitcoin (BTC) until the end of the year. If the Federal Reserve cuts interest rates and hints at further cuts in 2026, Bitcoin could see a rebound reaching 100,000. However, any aggressive cut may increase pressure on cryptocurrencies.

Bitcoin exchange-traded funds are seeing modest inflows.
The Bitcoin exchange-traded funds (ETFS) are witnessing a positive shift, but with only $8.48 million, marking the fourth consecutive day of inflows. However, trading volumes need to increase significantly to support a strong recovery in the Bitcoin market. Bitcoin exchange-traded funds saw a net outflow of $3.48 billion in November, making it the second worst month on record.

Strategy also purchased an additional 130 Bitcoin for $11.7 million, bringing its total holdings to 650,000. However, digital treasury bonds experienced the slowest monthly inflows of the year in November. Data from DefiLlama showed that digital treasury bonds in November saw inflows of $1.32 billion, a decrease of 34% from October and 88% from September.

Technical analysis for the Bitcoin/US Dollar pair
After reaching its all-time high of 126.2 thousand, Bitcoin is trading within a descending channel, having dropped to a low of 80.5 thousand. The recovery from this drop faced rejection at 93 thousand, which is the upper range of the descending channel, and it bounced down to 84 thousand. Although the price has stabilized above 85 thousand, it represents a 78.6% Fibonacci retracement from the low of 74.4 thousand to the high of 126.2 thousand. The Relative Strength Index is below 50.

To extend the downward trend, sellers will need a convincing break below 85,000 to test 80,000. A break below the lowest level in 7 months opens the door to 74,400, which is the lowest level for 2025.

Any recovery requires exceeding the level of 93,000, which is the round number and the upper range of the downward channel. Any rise above this level highlights the level of 94,300, which is the 61.8% Fibonacci retracement level, before the level of 100,000. Any rise above this level invalidates the bearish trend.