Key Points
- Bitcoin surged 7.41% in 24 hours, outperforming the broader crypto market’s 6.89% gain
- A $13.5 billion liquidity injection by the Federal Reserve eased short-term funding conditions
- Exchange-held BTC dropped to a multiyear low of 2.19 million coins
- Institutional accumulation continues, with ETFs now holding 6.4% of circulating supply
- Price broke above the critical $93,100 resistance level, reigniting bullish momentum
- Technical indicators show neutral-to-bullish signals but face stiff resistance near $109,500
Monetary Policy Shifts Fuel Risk Appetite
Markets responded swiftly after the Federal Reserve halted its balance sheet runoff and deployed $13.5 billion through overnight repurchase agreements. This intervention marked a subtle but significant pivot toward easing short-term financial conditions. Simultaneously, institutional participation in the Fed’s repo market spiked by 169% month-over-month, reflecting heightened demand for liquidity amid shifting macro expectations. These developments suggest a recalibration in market risk perception, where the availability of capital influences speculative behavior across asset classes.
Historically, Bitcoin has thrived during periods of expanding monetary liquidity. The probability of a December rate cut now stands at 89.2%, according to futures-based estimates. Such expectations often precede capital rotation into risk assets, with Bitcoin acting as both a hedge and a high-beta play. Upcoming inflation data—specifically the Personal Consumption Expenditures (PCE) index—could reinforce this narrative. A core reading below 2.8% would likely validate the dovish stance, opening the door for further inflows into volatile assets like digital currencies.
The Vanishing Float: Supply Dynamics Tighten
Bitcoin’s circulating supply available for trade continues to dwindle. Exchange reserves have contracted to just 2.19 million BTC, the lowest level recorded since 2018. This decline isn’t random—it aligns with sustained institutional accumulation. In one recent move, MicroStrategy acquired 4,020 additional BTC, adding $427 million to its treasury. Meanwhile, spot Bitcoin ETFs collectively control 6.4% of all existing coins, with BlackRock’s IBIT fund alone holding 625,000 BTC.
These numbers carry profound implications. Approximately 94% of the 21 million Bitcoin cap has already been mined, and estimates suggest between 3 to 4 million coins are permanently lost due to discarded private keys or hardware failures. As a result, the effective tradable supply shrinks further with every institutional purchase. The structural shift from retail-held, exchange-accessible coins to long-term corporate or regulated custody reduces market elasticity. Price sensitivity to new demand increases when available float tightens—a dynamic that could amplify future rallies or corrections alike.
Chart Patterns and Market Psychology Converge
Technical structure has turned decisively in Bitcoin’s favor after the asset reclaimed the $93,100 level—a previous swing high that had acted as formidable resistance. Hourly momentum indicators now sit in neutral territory, with the Relative Strength Index at 53.81, while the daily Moving Average Convergence Divergence (MACD) displays bullish divergence. Most notably, the $80,000 to $83,000 zone held firm despite over $214 million in leveraged long positions getting liquidated earlier in the week.
That resilience speaks to deeper shifts in market composition. The days of extreme volatility driven purely by speculative leverage appear tempered—at least temporarily—by stronger hands entering the market. However, challenges remain ahead. The 200-day simple moving average hovers near $109,500, representing a psychological and technical barrier. A weekly close above $96,000 might accelerate momentum chasing, triggering algorithmic buy orders and renewed retail interest. Yet until that level is convincingly breached, traders should remain cautious of profit-taking, especially given recent whale activity showing a modest uptick in exchange inflows of roughly 12,000 BTC per week.
Conclusion
Bitcoin’s current advance reflects a convergence of macro liquidity revival, institutional absorption of available supply, and technical validation at a pivotal inflection point. The Fed’s shift toward accommodative operations, combined with shrinking exchange reserves and ETF-driven demand, creates a structural imbalance favoring upward price pressure. While short-term profit-taking remains a plausible counterforce, the overarching trend leans bullish—provided the market maintains support above $93,100 through the weekly close. Confirmation of a sustained reversal would not only validate recent gains but potentially set the stage for a retest of all-time highs.