5 min readBitcoin is around 91k on Friday, having recovered from a low of 89.5k yesterday. The price continues to trade within a narrow range, rising by just 1% over the week.
Investors continue to digest Wednesday’s FOMC rate decision, which, together with concerns over an AI bubble, has driven market moves. Bitcoin briefly fell below 90k before recovering to trade 2% higher over the past 24 hours. Recovery is evident across the crypto market, with the total crypto market cap rising by 1.9% to $3.13 trillion over the past 24 hours.
The Federal Reserve cut rates by 25 basis points, as expected, to 3.5%-3.75%, marking the third consecutive rate cut. However, there were three dissenters, the highest number in a meeting since 2019. The split underscored growing uncertainty about the outlook for rates, as policymakers are at odds over whether the weakening labour market or sticky inflation poses the greater risk.
Federal Reserve Chair Powell stated that the central bank would remain data-dependent. The updated dot plot, which shows the median expectations for rates, was unchanged from September and indicates one rate cut next year. However, the market is pricing in more.
AI worries have calmed today, but could limit the upside
Concerns about AI profitability resurfaced this week following disappointing revenue and profit forecasts from Oracle, which reignited AI bubble fears on Thursday. Those fears have eased today, but could cap gains in tech stocks and crypto.
SOL rises, but on-chain data means upside could be limited
Solana is rebounding and outperforming the broader cryptocurrency market. SOL trades 5% higher over the past 24 hours. However, SOL still trades 27% lower across the year; on-chain data indicate that bears are in control.
Meanwhile, on-chain data pointed to further downside risk. According to CryptoQuant data, the Taker Cumulative Volume Delta (CVD) turned negative on Wednesday. The indicator measures buy and sell volumes over the three months. When the 90-day CVD is positive, it indicates the Taker Buyer Dominant Phase. A negative and falling value indicates a sell phase.
Further analysis of the Futures Average Order Size indicator, which measures the average size of executed SOL futures trades, indicates a trend toward smaller order sizes or increased retail activity.
SOL technical analysis
SOL is attempting to break out of the falling channel. The price has recovered from the 121.50 November low, forming a series of higher lows, but has failed to rise above the 145 resistance.
Buyers will need to rise above 145 to extend gains towards 154, the 78.65 Fib retracement.
Sellers will look to break below 130 to bring 121, the November low. A break below here creates a lower low.
Trading involves risk.
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