Bitcoin & Ethereum Volatility: Is The Fed The Only Hope?

(MENAFN- Daily Forex) Tuesday saw Bitcoin (BTC) once again tease bullish hopes, with King Crypto surging to a high of $94,726, a 4.86% rally from the daily low, before pulling back to $92,768 at the close of the daily candle.

BTC/USD 1-day chart. Source: TradingView

While the price chart above shows a new pattern of higher highs and higher lows since late November, taking a step back shows that it still has a lot of ground to make up following its plunge from above $126,000 on October 6, when BTC set a new all-time high and the Federal Reserve

The main force driving speculation now is the Federal Reserve – specifically, Wednesday's highly anticipated FOMC meeting at which Fed Chair Powell is expected to announce another rate cut. Markets are pricing in an 85–90% chance of a 25-basis-point rate cut, the third in 2025, which would bring the federal funds rate to 3.75–4%.

While retail waits with bated breath for a bullish announcement from the central bank, institutions have quietly been accumulating, preparing to finally enter the crypto game with weight trying to become as central to the digital asset market as they are with stocks.

Evidence for this can be seen in recent whale accumulations, with large holders absorbing 48,000 BTC in early December – equivalent to 240% of monthly issuance – signaling long-term conviction amid retail hesitation. Open interest in Bitcoin futures has climbed toward $30 billion, reflecting steady inflows from ETFs, which turned positive after outflows earlier in the quarter.

The recent price action has sparked intense debate within the ecosystem, with one side saying the 4-year cycle dictates that we are just in the beginning of a crypto winter, while the other side says the 4-year cycle is dead, and institutions have altered the trajectory.

Market analyst Ted Pillows represents the former, warning that BTC is mimicking its 2021 double-top performance and will soon have a bull-trap rally to $105,000 before heading lower.

X user Mike Investing is in the opposite camp and predicts Bitcoin will soon start its next wave higher, which will see it surpass $130,000 and further into uncharted territory as institutions begin to spread the crypto gospel.

For now, the focus remains on the Fed, and despite what bulls and bears think, there are numerous factors that will shape how things play out in the months to come. At the time of writing, BTC trades at $92,568, a decrease of 0.85% on the 7-day chart Upgrade Sparks Double-Digit Rally

While much of the focus for cryptos has been on Bitcoin, Ethereum has been a top performer over the past week, rallying from a low of $2,751 on December 1 to a high of $3,396 on Tuesday.

ETH/USD 1-week chart. Source: TradingView

Aside from the macroeconomic factors influencing the crypto market, the second-ranked crypto by market cap received a bullish boost from the Fusaka upgrade, which took effect on December 3.

Billed by some as a game-changer, the upgrade introduced (jargon warning) PeerDAS for 8x data blob capacity and Blob Parameter Only forks, which helped to scale throughput without decentralization risks.

In essence, the upgrade increased layer-1 capacity, enhanced layer-2 efficiency, slashed fees, and boosted rollup transactions. The increase in performance is particularly notable amid the rising use of stablecoins, which hit $6 trillion in volume in Q4 – surpassing the combined volume of Visa and Mastercard.

Other bullish factors for Ether include rising network activity, with active addresses up 10% week-over-week, and developer influx at 16,000 new contributors through September. The positive news, combined with a rate cut, has some analysts predicting its price could hit between $3,400–$3,900 by December's end, and $4,000+ in Q1 2026, though the recent volatility has many feeling shell-shocked and unsure of where things are headed.

Income Sharks has taken the middle path, noting that things are currently“looking good” for ETH, while also highlighting that it's advisable to remain cautious below $3,500, the level needed to confirm a“SuperTrend.”

At the time of writing, Ether trades at $3,322, an increase of 8.05% on the 7-day chart.

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