Bitcoin (BTC) jumped 11% from its Dec. 1 lows at $83,822.76 to over $93,000 overnight, driven by a convergence of macro and micro developments.
The Federal Reserve formally ended quantitative tightening (QT) on Dec. 1, coinciding with the New York Fed conducting approximately $25 billion in morning repo operations and another $13.5 billion overnight, the largest such injections since 2020.
The liquidity pump eased funding stress and propelled BTC higher as traders responded to the abrupt shift in monetary plumbing.
The combination of QT’s termination and direct liquidity provision typically supports high-beta assets by reducing borrowing costs and expanding the dollar supply in the financial system.
Rate-cut probabilities shifted back in Bitcoin’s favor after weak US manufacturing data reinforced the case for an economic slowdown.
The ISM manufacturing PMI printed at 48.2, marking a ninth consecutive month of contraction and pushing CME FedWatch odds for a 25 basis point cut at the Dec. 10 FOMC meeting into the high-80% range.
As a result of rising odds of a rate cut, risk assets stabilized following the Dec. 1 selloff, which traders attributed to speculation about the Bank of Japan tightening and shallow crypto liquidity.
Distribution catalyst meets flow reversal
Vanguard, managing roughly $9 trillion to $10 trillion in assets, opened its brokerage platform to third-party crypto ETFs and mutual funds tied to BTC, ETH, XRP, and SOL for the first time, creating immediate demand pressure.
Bloomberg senior ETF analyst Eric Balchunas described a “Vanguard effect,” noting Bitcoin rose about 6% around the US market open on the first day clients could access these products, with BlackRock’s IBIT alone recording approximately $1 billion in volume during the first 30 minutes of trading.
That distribution milestone arrived as US spot Bitcoin ETF flows turned modestly positive after four weeks of outflows totaling more than $4.3 billion.
Market structure amplified the rally after Bitcoin broke through the resistance level.
After November delivered the worst monthly performance in more than four years, and the 7.3% drop on Dec. 1 pushed BTC below $84,000, positioning skewed bearish, and sentiment gauges registered “extreme fear.”
Bitcoin remains down more than 30% from its October peak near $126,000, with November alone erasing roughly 17% amid over $3.5 billion in ETF redemptions and stress around large corporate holders like Strategy.
The rebound reflects macro-driven relief from QT by the Fed and liquidity injections, structural tailwinds from Vanguard’s platform opening and slowing ETF outflows, and short-covering off a closely watched support level rather than a reversal of the broader downtrend.
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