Remember that feeling when you wake up, check your phone, and suddenly everything is green again? That’s exactly what happened this morning on December 2. After a rough couple of days that had most of us staring at red candles and questioning life choices, the crypto market decided to remind everyone why we’re still here. Bitcoin is flirting with $88,500, Ethereum is pushing back toward $2,900, and even the meme coins are joining the party. So what changed overnight?
A Classic Relief Rally With Extra Spice
Let’s be honest—yesterday felt brutal. We watched billions vanish in hours, leverage got wrecked, and the usual doom posters came out of hibernation. Yet here we are, less than 24 hours later, with the total crypto market cap knocking on $3 trillion again. This isn’t some gentle recovery. This is the market doing what it does best: moving fast and leaving analysts scrambling.
Liquidations Tell the Real Story
One number caught my eye this morning: total liquidations dropped more than 60% in a single day to around $328 million. That might still sound like a lot of money (because it is), but compared to the bloodbath we saw earlier this week, it’s practically peaceful.
When liquidations fall that sharply, it usually means the forced selling pressure is easing. Fewer people are getting margin-called, fewer positions are exploding, and the market finally gets room to breathe. Think of it like a forest fire running out of dry wood—suddenly the flames calm down and new growth can start.
At the same time, futures open interest actually crept higher. That combination—lower liquidations plus rising open interest—is textbook “the worst of the selling might be over” territory. Of course, we’ve all been fooled by this setup before, but the data right now looks genuinely constructive.
The Fed Just Became Crypto’s Best Friend Again
Perhaps the biggest catalyst nobody saw coming: the probability of a December rate cut just surged to 90% according to prediction markets. A month ago that number was barely above 50%. That’s not a small shift—that’s the kind of move that makes traders sit up and reload their spot bags.
“Markets now assign a 90% chance the Fed cuts rates by 25 basis points in two weeks. That’s a complete reversal from where we were in early November.”
Rate cut expectations matter enormously for risk assets, and crypto is the ultimate risk asset. Lower rates mean cheaper borrowing, more liquidity chasing yield, and a weaker dollar—basically the perfect cocktail for Bitcoin and friends.
And then there’s the quiet part that barely anyone is talking about yet: the Fed might be inching toward the on-ramp for actual quantitative easing again. Overnight repo operations spiked to $13.5 billion—the second-largest injection since the pandemic days. When banks suddenly need that much short-term cash from the central bank, it’s rarely a sign everything is fine behind the scenes.
In plain English? The plumbing of the financial system is creaking, and the Fed is already greasing the wheels. If that turns into full-blown QE in 2026, we’re looking at the exact macro backdrop that sent Bitcoin from $10k to $69k last cycle.
Buy-the-Dip Reflex Is Still Alive and Well
Never underestimate the power of muscle memory in crypto. Every time we get a sharp two-day flush, the same pattern repeats: panic selling on the way down, then aggressive dip-buying once the bleeding stops. Today feels like another chapter of that same story.
Spot demand looks particularly strong. Exchange balances for Bitcoin continue to trend lower, whale wallets are accumulating, and stablecoin inflows picked up again overnight. These aren’t the actions of a market that’s ready to roll over—they’re the actions of patient money positioning for the next leg higher.
- Bitcoin spot CVDs turning positive
- Stablecoin reserves on exchanges rising again
- Coinbase premium flipping green
- Long-term holder supply at all-time highs
All the on-chain signals that worked beautifully during the 2023-2024 recovery are flashing the same colors right now. Coincidence? Maybe. But I’ve learned not to bet against the crowd when all these metrics line up at once.
Yes, This Could Still Be a Massive Bull Trap
Let’s not get carried away. We’ve seen this movie before—multiple times this year alone. Sharp rebound after a flush, everyone declares the bull market back on, then price rolls over and makes new lows. The technical term is dead cat bounce, and crypto has PhD-level expertise in delivering them.
Remember early November? Bitcoin ran from $99k to $107k in a week, social media crowned new all-time highs early, and then… well, we all know how that ended. The current setup shares some uncomfortable similarities: rejection at round-number resistance, momentum indicators resetting from overbought, and seasonals turning mildly bearish into year-end.
More importantly, monthly time-frame momentum just flipped bearish for the first time since the 2022 bottom. That’s not some random oscillator—it’s the same signal that called every major top and bottom of the last decade. Ignoring it feels a lot like tempting fate.
So What Happens Next?
Here’s my personal take after watching too many of these cycles: the path of least resistance right now is probably higher, but with a massive asterisk. If Bitcoin can clear $90k cleanly and turn it into support, the bull case gets significantly stronger. Fail to do that, and we’re likely looking at a slow grind lower into January with plenty of fakeouts along the way.
The macro wildcard remains the Federal Reserve. Another 25 bps cut in December is basically priced in now, but what matters is the forward guidance. If the Fed sounds even mildly dovish—hinting at multiple cuts in 2026 or pausing balance-sheet runoff longer than expected—that could be the catalyst that finally breaks us out of this range for good.
Until then, I’m treating this rally with cautious optimism. The setup looks better than it did 48 hours ago, no question. But we’ve been burned enough times this cycle to know that conviction comes with scar tissue.
Either way, one thing feels certain: volatility isn’t going anywhere. Buckle up, keep position sizes reasonable, and maybe—just maybe—we’re watching the early stages of the next leg everyone has been waiting for since the ETF approvals.
The market just reminded us why we’re still here after all these years. It never gets boring.
