Beware of the Federal Reserve's hawkish stance! Bitcoin is stuck below the 90,000 level and struggling to break through. Is the death cross on the technical charts a sign that winter is coming?

The Market Falls Into a Narrow Stalemate, Year-End Liquidity Drying Up Causes Turbulence

As December progresses into late month, the crypto market is experiencing a “quiet stagnation.” Bitcoin is currently oscillating around $87,650, clearly under pressure from its previous highs. Trading volume has shrunk, holdings have significantly decreased, and the market’s ability to absorb directional trades has been cut nearly in half, directly reflecting the extreme lack of liquidity at year-end.

The total market capitalization of the entire crypto market remains around $3.08 trillion, although it has rebounded somewhat compared to the weekend. The mixed pattern of gains and losses indicates market participants are in a wait-and-see mode. Ethereum trades around $2,950, while Zcash (ZEC) has reversed course and risen 7.68% to $449, showing more frequent capital shifts between sectors.

Technical Signals Are Alarming: Death Cross Forming

Bitcoin’s technical chart is sending a clear bearish signal. The 50-day moving average has crossed below the 200-day moving average, confirming the formation of a death cross—an pattern historically often indicating a larger correction.

Current technical indicators show a distinctly bearish setup:

Trend Strength Accelerating Downward — The Average Directional Index (ADX) has reached 32.9, well above the 25 threshold for a strong trend, implying that selling pressure is not fleeting but sustained. The Relative Strength Index (RSI) stands at 44.26, in the neutral zone, neither oversold enough to attract bottom-fishing nor overbought to trigger profit-taking, leaving the market in a state of balanced but directionless momentum.

Moving Averages Show Bearish Arrangement — The short-term moving averages have crossed below the long-term ones, reinforced by a bearish Ichimoku cloud setup, strengthening the technical confirmation of a downtrend. Even if prices rebound occasionally, resistance levels above are sufficiently heavy.

Consolidating Momentum Hides Risks — Technical momentum compression indicates that bulls and bears are engaged in fierce tug-of-war within a narrow range, with a breakout imminent but the direction uncertain.

The Fed’s “Hawkish” Rate Cut Trap

Market expectations for a rate cut by the Federal Reserve this week are already at a 90% probability, but this may not be good news. The rate cut is expected to be a modest 25 basis points, with the key factor being the Fed’s language about future policy paths—this is the real trigger for volatility.

Traders have fully priced in this rate cut expectation and tend to believe that the Fed will pause further easing in January. This reflects an expectation of a “superficial, limited” easing cycle rather than a full rate-cutting channel. Meanwhile, policy divergence among major global central banks is intensifying: the Bank of England faces deepening disagreements, the European Central Bank maintains a hawkish stance, and the Bank of Japan is preparing to tighten policy to levels unseen since 2007.

This asynchronous policy stance among central banks is the macro environment that the crypto market should truly be wary of.

Structural Weaknesses Are Eroding Upward Momentum

Although Bitcoin has rebounded from its November lows, internal market structures are deteriorating.

Spot Demand Is Clearly Shrinking — US-listed spot Bitcoin ETFs are experiencing continuous outflows, indicating institutional investors are not building positions amid rising prices but rather reducing holdings. The Cumulative Volume Delta (CVD) is significantly negative, confirming this trend.

Holders’ Losses Are Widening — Over 7 million Bitcoins are in unrealized loss, echoing the despair seen during the 2022 bear market. While net capital inflows remain positive (averaging about $8.69 billion per month), the scale has fallen sharply from peak levels, weakening buffers against downside risks.

Market Resilience Is Significantly Declining — As spot buying support weakens, price sensitivity to external shocks increases. Any macro surprises or policy shocks could trigger a vicious cycle of forced liquidations.

The Shadow of Crypto Winter Is Emerging

Both technical and fundamental warnings have been issued. The Fear & Greed Index is currently at 24 (fear zone), although it has eased from the extreme fear level of 10 at the end of November, it still remains outside the safe zone.

While death crosses in Bitcoin and Ethereum are not new, each historical context differs. If current structural weaknesses continue to worsen, combined with Fed policy uncertainty, there is a real risk of a deeper correction in the first half of next year.

However, it’s important to note that a death cross is not an absolute doom signal—historically, it has sometimes marked local bottoms rather than a free-fall collapse.

Key Risks and Technical Boundaries

Immediate Resistance Levels: $99,036 (technical resistance); $105,000 (200-day MA psychological level)

Immediate Support Levels: $82,084 (key technical support); $68,384 (strong support zone)

Bitcoin has gained 1.69% over the past 7 days, reaching a high of $92,296 and supported at a low of $89,618. Although volatility is modest, the control by bears remains evident.

Factors Market Participants Should Constantly Watch: Rate cuts are not the main risk; the real danger lies in the Fed’s hawkish language about future easing; divergence in global central bank policies causing forex volatility; and ongoing liquidity drying up potentially triggering chain liquidations.

In the short term, whether Bitcoin can effectively hold recent support and rebound above $90,000 will be a crucial indicator for future trends. A breakdown below $82,084 would make a further decline toward the strong support at $68,384 highly probable.

Overall, the current market environment is not suitable for aggressive bullish operations; caution and risk management should be prioritized.