Bitcoin recovers above $16k thanks to buying activity: what to expect next?

Over the past few weeks, the cryptocurrency market has been flooded with negative news, which is contributing to the mass capitulation of investors. This, in turn, affects the price movement of Bitcoin and other cryptocurrencies.

The likely bankruptcy of Genesis and Binance's refusal to help the company triggered another wave of fear in the market. The cryptocurrency broker's management released a report that listed $2.8 billion in outstanding loans. Part of the debt arose due to the bankruptcy of Three Arrows Capital.

In addition, the massive capitulation of miners continues, which has a negative impact on the price of Bitcoin. Bitcoin mining companies are selling at least 310 BTC coins per day, according to Glassnode. Mining giant Core Scientific reports that the company lost $1.7 billion in 2022 and thus confirms the big problems of the mining industry.

Despite all the negativity surrounding the crypto market, positive signals have begun to emerge. Fed officials said they see reason to slow the pace of rate hikes. The rate is expected to be raised by 0.5% during the December meeting.

At the same time, the regulator will react according to the dynamics of declining inflation. Officials admitted that the 5% threshold will be raised in case of disappointing statistics in the coming months.

The Fed's statement was received by the markets with excitement and belief in the end of the quantitative easing phase. The stock market and cryptocurrencies also reacted with local growth. In addition to the hazy medium-term outlook, short-term favorable developments are looming for the crypto market.

Markets are laying almost 100% chance of a 50 basis point rate hike in December. This is a positive signal indicating the first successes in the fight against inflation. In addition, it is important to consider the factor of the New Year and Christmas holidays, when investor sentiment improves and directly affects the market.

Given these factors, we can assume that November will be the final point in the formation of the local bottom of Bitcoin. Subsequently, we will see an upward rebound and probably a local bullish trend. However, the likelihood of a recovery movement will depend on the resumption of correlation with the stock market.

On the daily chart, we see that the bulls managed to protect the support area of $15.5k–$15.8k. The price tested the boundary, but later on, the buyers managed to push the bears back. As of writing, the cryptocurrency is trading around $16.5k and gradually moving towards the $17k–$17.2k resistance zone.

The recovery movement of the price was provoked by the statements of the members of the Fed, but it is not worth waiting for a dramatic change in the situation. The price continues to move from the upper border of the range to the lower one and vice versa. Given the lack of bullish strength, we should expect a retest of $15.5k–$15.8k.

The combination of fundamental and on-chain factors points to the formation of a new local bottom followed by an impulse rebound. The current state of the market leads one to believe that a major negative factor will be needed for the final plunge.

Bitcoin's news and technical lull provoke sideways movement without serious price spikes. However, it is important to consider the impulsive nature of the market, where any newsbreak can be the key to the final formation of a local bottom.

We can see that Genesis is attempting to bring the market as openly and gently as possible to a future bankruptcy, but there remains a high probability that this news will blow up the market. It is important to prepare for a final plunge to the bottom, which will be in the $13k–$14.8k range. Due to a further impulse recovery move, a period of prolonged consolidation will begin.