Bitcoin is finding room to jump, but not yet the fuel to run.
The macro background has been improved just enough to give bulls something to work with. Cooling headline inflation has bolstered expectations for three rate cuts this year, reviving the familiar playbook where easier monetary policy supports risk assets.
And it could signal the possibility of liquidity slowly returning after months of tight economic conditions for the crypto markets.
But be careful not to read too much into that shift. The Federal Reserve is unlikely to embark on an aggressive easing cycle. Instead, it appears to be set on a measured approach that gradually rebuilds liquidity. It creates an environment where bitcoin can stage tactical rallies, yet struggles to hold them.
Bitfinex analysts describe the market as one that tends to move in waves rather than pure bursts.
“In this environment, volatility remains likely,” the firm said in a note shared with CoinDesk. “Tactical upside moves may occur when positioning becomes overly defensive, but sustained structural progress will require clearer confirmation from both macro disinflationary trends and sustained spot demand.”
Spot recoveries continue to meet steady sales. Each bounce is absorbed more evenly than earlier in the quarter, suggesting some stabilization.
The Overnight tape is a good example. Bitcoin traded as high as $68,500 before rolling over during the US afternoon and slipping below $66,000, a move that matched a stronger dollar and hawkish Fed minutes. That kind of intraday reversal is the market’s way of saying that rallies are still fragile and that traders are quick to sell the moment macro conditions turn even a little less friendly.
“It is alarming that Bitcoin’s dynamics mirror the recent strengthening of the dollar. When investors become convinced that the rise in the dollar is a trend, there can be a sharp increase in volatility,” Alex Kuptsikevich, FxPro’s chief market analyst, said in an email.”
“Volatility appears to have been turned off in this market, while stock indices are much more buoyant. There, investors are actively buying dips and relying on support in the form of key moving averages: 50 days for the Dow Jones and Russell 2000 and 200 days for the Nasdaq100. The crypto market is now below 50% and its 50-day and 2-0-day. 31%, respectively,” he added.
Sentiment remains fragile, meanwhile, as a crypto fear gauge has posted single digits in nine of the past fortnight, territory rarely seen outside of previous cycle lows.
At the same time, stablecoin outflows from major exchanges point to tighter liquidity, and long-term holders have shown signs of stress comparable to late bear market phases in 2022, according to Glassnode.
For now, bitcoin appears to be caught between improved macro optics and stubborn supply. Tactical upside remains possible, especially when positioning leans too defensive.
However, lasting progress is likely to require clearer evidence of disinflation, a softer dollar and steady spot demand. Until then, the path higher up may be bumpy.
