The cryptocurrency market has staged a sharp intraday reversal, recovering from a brutal morning sell-off that briefly threatened the $82,000 support level.
While Bitcoin has pared losses to trade near $85,200, the recovery is occurring against a backdrop of heightened macro anxiety. The "capitulation" witnessed in early trading appears to be part of a broader liquidity event, driven by surging volatility in traditional equity markets and a sudden repricing of Federal Reserve policy expectations.
Volatility Returns
The panic in risk assets is quantifiable. The VIX (CBOE Volatility Index) spiked aggressively at the open of US trading on Thursday and has refused to recede.
Excluding yesterday’s chaotic session, the VIX is currently trading at levels higher than at any point since 17 Oct. This sustained elevation suggests that fear is not confined to the crypto sector; equity investors are hedging aggressively against further downside, creating a risk-off environment that typically headwinds digital assets.
Fed Pivot Repriced
Adding to the complexity is a rapid shift in interest rate outlooks.
According to the CME’s FedWatch tool, the probability of a 25-basis-point rate cut at the Federal Reserve's upcoming meeting on 10 Dec has surged. Markets are now pricing in a 73.5% chance of a reduction to the 350–375 bps range. This is a dramatic repricing from just 24 hours ago, when the probability stood at only 39.1%. The sudden jump suggests investors are betting that the Fed may be forced to intervene to stabilize the shaken confidence in global markets.
Sentiment at Extremes
Despite the intraday price recovery, sentiment indicators remain in the gutter. The Crypto Fear & Greed Index has collapsed to 11/100, signaling "Extreme Fear".
This reading matches the lows seen in June 2022. Historically, such extreme bearish sentiment often marks a cyclical bottom, as seller exhaustion sets in. The divergence between today’s recovering price action and the rock-bottom sentiment score could indicate a potential reversal opportunity for contrarian traders.
Market Recovery
Bitcoin’s ability to reclaim the $85,000 handle suggests strong spot demand absorbing the panic selling.
- Bitcoin (BTC): Rebounded from lows of $81,629 to ~$85,200.
- Altcoins: Major assets, including Solana (SOL) and BNB, have significantly reduced their daily losses, now trading down just 1–2% compared to the 7–10% deficits seen earlier.
Investors will be watching the daily close closely. A finish above $86,000 would paint a bullish "hammer" candle on the daily chart, potentially confirming that the local bottom is in despite the macro turbulence.
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