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Bitcoin recovered to $88,500 on Tuesday after briefly falling below $84,000 on Monday, marking a 2.7% gain by mid-morning ET. The drop came amid renewed caution in global markets following November’s worst monthly performance for Bitcoin in over four years. Spot Bitcoin ETFs also faced heavy outflows, adding pressure to the market.

Market volatility highlights Bitcoin’s risk

Monday’s sudden decline surprised many investors, coming just days after Bitcoin briefly rebounded from $80,000. Analysts point to a mix of profit-taking, thin liquidity, and macroeconomic uncertainty as the main drivers behind the sell-off.

Tom Essaye from the Sevens Report explained:

While demand from corporate holdings, financial transactions, and spot ETFs exists, it remains small relative to Bitcoin’s total supply. Currently, spot ETFs account for only about 6% of all Bitcoin in circulation.

Macro events keep investors on edge

The crypto market is closely watching U.S. macroeconomic developments. Expectations for a Federal Reserve rate cut have risen to nearly 90%, giving hope for easier financial conditions.

However, uncertainty around the timing and scale of the rate cut continues to fuel volatility. Investors are also monitoring Washington, where President Trump is expected to announce a nominee for Fed Chair Jerome Powell’s successor, a decision that could impact global markets.

Crypto stocks feel the pressure after Bitcoin’s fall

Bitcoin’s drop affected crypto-linked stocks as well. Key movements included:

• Strategy Inc. fell 3.3% after lowering its full-year guidance due to Bitcoin volatility

• Coinbase (NASDAQ:COIN) dropped nearly 5%

• Robinhood (NASDAQ:HOOD) slipped more than 4%

Analysts warn that if Bitcoin falls below its recent $81,000 lowit could trigger additional technical selling, impacting both the cryptocurrency and equities.

Altcoins see modest gains amid market caution

Despite Bitcoin’s turbulence, many altcoins saw modest gains:

• Ethereum: +1.5% to $2,859

• XRP: +1.7% to $2.05

• Solana: +3.5%

• Cardano: +5.5%

• Polygon: +1%

• Meme coins (Dogecoin, $TRUMP): +2%

The market’s performance suggests that while Bitcoin remains the dominant driver, altcoins continue to benefit from cautious risk-on sentiment. Investors are closely monitoring whether this rebound can sustain momentum or if December volatility will persist.

These gains indicate that while Bitcoin drives overall market sentiment, altcoins are benefiting from selective risk-on behavior among investors.

What Traders Should Watch

Bitcoin’s rebound offers short-term optimism, but analysts advise caution. What traders should consider:

• Monitor technical levels: $81,000 for Bitcoin is a critical support. A break below may trigger further selling.

• Liquidity conditions: Watch institutional activity, as it strongly affects price trends.

• Altcoin opportunities: Some altcoins are showing resilience even during Bitcoin dips.

The latest movements confirm that crypto remains highly sensitive to investor sentiment and macroeconomic signals. Traders should stay alert as December’s volatility continues to unfold.

Disclaimer – The information provided in this article is solely for educational and informative purposes. The contents of this article should not be considered as financial or investment advice. Cryptocurrency markets are highly volatile, with prices that can fluctuate rapidly. Always do your independent research and consult with a qualified financial advisor before making any investment decisions. Neither the author nor the publisher accepts any liability for potential losses and/or damages arising from using this information.