Bitcoin surged to a three-week high on Tuesday, triggering a wave of renewed market enthusiasm as traders positioned themselves ahead of a pivotal Federal Reserve meeting.
The world’s largest cryptocurrency climbed to $94,625 on Coinbase, marking its highest point since late November.
The rebound, described as a “much-needed” rally by analytics firm Santiment, has also fueled an uptick in bullish sentiment across social media.
Sharp Price Spike Followed by Quick Pullback
Santiment noted that the rapid gains prompted a surge in online posts calling for “higher” prices and expectations of a continued climb.
However, the optimistic sentiment quickly tapered.
Bitcoin retreated back to around $92,400 shortly after the peak.
Analysts at Santiment commented that “Markets move opposite to the small traders’ behavior,” suggesting that the initial excitement may be a signal of short-term cooling.
Fed Decision Looms Over Market Direction
The next major catalyst appears to be the Federal Reserve’s policy announcement scheduled for Wednesday.
According to futures markets tracked by CME Group, there is an 88.6% probability of a 0.25% interest rate cut.
Jeff Mei, chief operations officer at BTSE, said Bitcoin’s move may be partly driven by expectations of looser monetary policy.
“Bitcoin is likely rallying on rate cut expectations, but right now it’s difficult to say what will happen after tomorrow’s Fed meeting,” he said.
Analysts warn that if the Fed signals hesitation about additional cuts, the short-term outlook for Bitcoin could turn negative.
Forecasting models show only a 21.6% chance of another quarter-point cut in January.
Mei warned, “The risk is that the Fed outlook could include hesitation to cut rates or stimulate the economy further for the risk of inciting inflationary pressures. This happened the last time the Fed cut rates and prices tanked afterward.”
Independent trader “Sykodelic” echoed the caution, noting, “Any price action leading into FOMC is hard to read because tomorrow will be very volatile.”
Long-Term Investor Calls Spike “Manipulation”
Not all market participants viewed the rally as organic.
A long-term Bitcoin investor known as “NoLimit” told followers that the sudden spike “doesn’t look organic at all.”
He argued that the move had “all the fingerprints of a classic engineered pump,” citing thin order books and concentrated bursts of market buys within a short period.
“People are celebrating, but if you zoom out for even 10 seconds, the move has all the fingerprints of a classic engineered pump,” he said.
He added that the lack of follow-through and immediate price stalling suggest large traders may have used the rally to offload holdings at higher levels.
Market Awaits Fed Outcome
With volatility expected to intensify, analysts say the coming days could determine whether Bitcoin recovers further or faces a pullback.
The Fed’s policy signals, combined with trader sentiment and liquidity conditions, are likely to dictate the cryptocurrency’s short-term trajectory.
For now, the market remains on edge as participants brace for what could be one of December’s most influential macroeconomic events.
