Bitcoin breaks the $90.000 barrier: Here's what's driving its price today

Bitcoin surpasses $90.000, driven by institutional flows into ETFs, a shift in Fed rate expectations, and massive short sell-offs.

The cryptocurrency market has once again demonstrated its ability to react quickly to macroeconomic stimulus and institutional demand. In the last 24 hours, Bitcoin (BTC) has managed to break through the psychological barrier of $90.000 again, registering a rise of 5,04%This move not only surpasses the average performance of the digital asset market, which advanced 3,95% in the same period, but also marks a strong recovery from the lows recorded last week, when the price of BTC touched $80.000.

Bitcoin's current price dynamics are responding to a convergence of factors that go beyond simple retail speculation. The current rally suggests that large market players have taken advantage of the correction to accumulate, while the economic outlook in the United States has begun to favor risk assets. 

Below, we break down the three fundamental pillars that support the new surge of the leading cryptocurrency in the market.

The return of institutional capital and the weight of BlackRock

One of the most reliable indicators of the current market's health is the performance of spot exchange-traded funds (ETFs) in the United States. After a period of uncertainty, Capital flows have returned to positive territoryRecent data confirms net inflows of $21,12 million into these financial products on the last trading day, and over $128 million on Tuesday, a sign that institutional appetite for BTC has not been satiated.

At the heart of this activity is BlackRock, the world's largest asset manager. Its IBIT fund led the inflows with nearly $43 million, as the firm takes advantage of price corrections to bolster its Bitcoin position. BlackRock is currently estimated to have around 700.000 BTC under management, a figure that underscores its institutional commitment to this cryptocurrency.

The price of Bitcoin is around $91.000 at the time of writing, and the concentration of buying around this level shows that institutions consider this price range valuable. 

However, an analysis of ETF Assets Under Management (AUM) reveals significant room for growth. Currently, total assets under management stand at approximately $120.000 billion, a 22% decrease from the peak of $155.000 billion reached in October. This suggests that if market conditions improve, we are likely to see increased capital inflows, further boosting the cryptocurrency's price.

A dramatic shift in expectations regarding the Federal Reserve

While capital inflows provide the fuel, the Federal Reserve (Fed) appears to be fine-tuning the engine. The macroeconomic environment has undergone a remarkable narrative shift in just seven days. Traders and investors have recalibrated their expectations regarding US monetary policy for the end of the year.

Just a week ago, the market assigned a modest 30% probability to an interest rate cut in December. Today, that figure has skyrocketed to 85%This renewed optimism stems from the latest economic reports, which show a cooling in the US economy sufficient to justify a less restrictive monetary policy.

The correlation between Bitcoin and traditional markets has become evident today. The cryptocurrency's rise coincided with a 0,55% gain in the S&P 500 index. Both markets are pricing in a scenario of lower financing costs, which historically benefits riskier assets. When money becomes cheaper or more accessible, liquidity tends to flow into instruments with higher volatility and potential returns, such as Bitcoin.

The market is redefined after the purge of weak positions

Beyond the economic fundamentals, the market's internal structure played a decisive role in the recent upward movement. The market was in a tense technical situation, with the Relative Strength Index (RSI) registering extreme oversold levels (23), a condition that often precedes corrective rebounds.

This technical situation, combined with a shift in sentiment, triggered what is known in financial jargon as a "short squeeze." Traders who had bet that the price would continue to fall were forced to buy back their positions to cover losses as the price rose.

The data indicates that approximately $1.000 billion in positions were liquidated, removing weaker hands and bearish speculators from the market. This purge of leveraged positions has cleared the market, reducing immediate selling pressure and paving the way for genuine demand, driven by ETFs and macroeconomic prospects, to take control of the trend.

Is $90.000 a new floor for Bitcoin?

Bitcoin's return to the $90.000 mark reaffirms the cryptocurrency's resilience in the face of severe corrections. The combination of visible institutional support through ETFs and a macroeconomic outlook pointing to increased liquidity from the Fed paints a constructive picture for the end of the year.

Although the crypto market is known for its inherent volatility, the investor base appears to be rotating from short-term speculation towards long-term strategic accumulation. 

Analysts are now focusing on the upcoming Federal Reserve meeting and the ability of ETFs to close the gap in assets under management compared to the October highs. If these factors remain constant, the $90.000 barrier could shift from a difficult ceiling to a new floor for the price of BTC. 

Among the voices analyzing this situation, Michaël van de Poppe stands out, who he pointed He recently stated that Bitcoin is about to face a crucial level. According to him, if this $90 barrier is decisively broken, there's a clear path for the price to return to around $100.000. Although he sees a period of consolidation as likely, he wouldn't even rule out a small correction towards $88.000 before moving forward. In his view, Bitcoin's bullish cycle still has a long way to go, making it clear that this isn't a passing bounce, but a strong trend with the potential to continue.