Bitcoin rises 9% from Friday lows but analysts say quick reclaim of recent peaks looks unlikely: Here's why

Bitcoin price

World's largest cryptocurrency Bitcoin traded over the $88,000-mark briefly on November 24 before paring some gains. This comes after a sharp correction from recent highs. Analysts have, however advised caution, listing out key triggers for crypto investors to watch out for

Bitcoin crashed more than 36 percent in a over 6 weeks from its all time high of $126,198 (October 6) to fall below the $81,000-mark on November 21, according to data on Coinmarketcap. The crypto has now gained more than $7,000 (9 percent) from the recent low during the span of a weekend to hit a high of $88,097 today. It was trading at $86,218.70 as seen at 5.30 pm IST.

The sharp rebound comes as investors priced in a higher probability of a December rate cut by the US Federal Reserve. New York Fed President John Williams, a permanent voter on rate policy and vice chair of the rate-setting Federal Open Market Committee, said on Friday that interest rates can fall "in the near term".

"I view monetary policy as being modestly restrictive...Therefore, I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral," Williams said. Investors now put a nearly 60 percent chance of a 25 basis point cut during the American central bank's December meeting, reversing what had been strong conviction that the Fed would pause due to concerns about inflation.

Fed rate cut is expected to improve liquidity and act as a positive catalyst for risk assets like cryptocurrencies. Additionally, a rate cut by the American central bank is expected to weaken the US dollar, which in turn makes crypto more appealing.

What to expect?

"Some of the supportive forces that once fueled strong upside may already be priced in, meaning a sharp rebound isn't guaranteed without fresh catalysts. Deeper monetary easing, renewed geopolitical disruption, or a shift in real yields could help sentiment improve, while a firmer dollar, rising real yields, or weakening conviction could extend volatility or trigger further corrections," he said.

'Bitcoin's outlook is cautiously balanced':

According to Maxwell, Bitcoin's outlook at this stage is cautiously balanced, and assuming an automatic return to previous peaks may be premature.

Shravan Shetty, Managing Director at Primus Partners, expects Bitcoin to remain volatile but be active as an asset class. Together with gold, Bitcoin has attracted flows, helping increase the price, he added.

"The pro crypto narrative from the US administration together with movement of inflows away from dollar had helped Bitcoin gain. The global risk off and the higher inherent beta has led to deleveraging and short term panic, driving prices lower," he added.

'Bitcoin's fall reflects broader derisking across global markets'

Harshal Dasani, Business Head at INVasset PMS, said that Bitcoin's recent sharp correction is not an isolated event. It reflects a broader derisking across global markets. "Investors are pulling capital out of high-beta assets, and crypto is taking the deepest hit. Flows are visibly shifting toward hard assets like gold and silver, both of which have seen sustained accumulation from global institutions and private players. In contrast, Bitcoin is witnessing persistent outflows from major funds, signalling that institutional conviction has weakened materially," he said.

At a macro level, the return of rate volatility and geopolitical risk has pushed investors toward tangible stores of value rather than speculative digital assets, Dasani noted.

'Probability of further downside significantly higher than a quick reclaim':

"For Bitcoin to reclaim its highs, it would need a strong resurgence in risk appetite and a clear catalyst that reignites institutional buying. As things stand, the structural flows are turning against crypto, and the market is increasingly treating Bitcoin as a source of liquidity rather than a safe haven. The probability of further downside remains significantly higher than a quick reclaim of its previous peak," he added.

Vikas Gupta, Country Manager, Bybit India sees the recent decline to be driven by profit-booking rather than any meaningful exit from long-term institutional investors.

"Bitcoin is trading in what looks like a key decision zone. Its recent drop of about 30% from highs signals that risk is rising rather than fading. Until we see strong triggers-like a major Fed rate cut, large ETF inflows or regulatory action that boosts confidence-the upside remains limited. On the flip side, if macro stress intensifies, Bitcoin could revisit much lower levels. For now, this isn't a clear buy-and-forget asset-it's a wait-and-watch asset," said Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.