Bitcoin's Next Bull Market May Not Come From More 'Accommodative Policies'

Bitcoin and other major cryptocurrencies have shown signs of short-term rebounds amid global risk-off sentiment. The total crypto market capitalization rose to $2.65 trillion, but gains have stalled near key resistance levels. Market participants are closely watching for signs of sustained buying momentum amid ongoing macroeconomic uncertainty.

The Federal Reserve has maintained a cautious stance on monetary policy. Vice Chair Philip Jefferson stated that current policy is well-positioned to respond to economic changes, with a focus on data rather than pre-set easing timelines. He highlighted the labor market as roughly in balance and inflation still elevated. This suggests no immediate aggressive rate cuts from the central bank.

Political developments in the U.S. are also shaping crypto market expectations. Crypto PACs have amassed significant war chests ahead of the midterms, with groups like Fairshake, Defend American Jobs, and Protect Progress spending tens of millions on independent expenditures. This indicates growing industry influence over regulatory and legislative outcomes.

Why Did This Happen?

The recent crypto rebounds appear disconnected from traditional economic indicators. Bitcoin's recovery to around $78,000 has not aligned with gold or silver trends, weakening its narrative as a 'debasement hedge trade'. ETF inflows and strategic accumulation have provided some support, but bearish momentum remains strong.

Market analysts note that Bitcoin's recent rebound could represent a 'dead-cat bounce,' a temporary upward movement within a broader downtrend. Open interest and funding rates also show mixed signals, with high open interest suggesting potential for trend continuation, while negative funding rates indicate bearish sentiment.

What Are Analysts Watching Next?

Crypto market participants are monitoring multiple catalysts for potential direction. Passage of the CLARITY Act, which would establish a regulatory framework for digital assets, remains a key event. However, odds of passage have diminished in recent weeks due to ongoing debates over stablecoin yields and regulatory scope.

Broader economic factors are also critical. Federal Reserve Vice Chair Philip Jefferson emphasized the importance of data in shaping monetary policy decisions, highlighting inflation, labor market balance, and potential productivity shifts. Kevin Warsh, the newly nominated Fed chair, has also raised attention for his potential impact on balance sheet policy.

Crypto PAC activity is another focus area. The increasing use of political super PACs by industry players highlights a shift in influence strategies. While traditional lobbying and direct contributions remain significant, large-scale PAC spending is now playing a larger role in shaping policy outcomes.

Technical indicators provide some short-term guidance. A bullish crossover of the MACD line above the signal line could reinforce upward momentum for some altcoins. For Bitcoin, resistance at $80,000 and the 50% Fibonacci retracement level at $82,602 are key watchpoints.

What Are the Investor Implications?

Investors are advised to remain cautious given the current market environment. While short-term rebounds may offer buying opportunities, the broader trend remains bearish for most major cryptocurrencies. Market liquidity has been constrained for several months, limiting large-scale accumulation.

Positioning for a potential bottom is beginning to emerge in the options market. Long-term holders are experiencing unrealized losses, signaling a possible shift into an 'extremely bearish' phase. Analysts like Mike McGlone from Bloomberg Intelligence have expressed concerns over a potential $10,000 price target for Bitcoin in 2026.

Corporate holders are also experiencing significant losses. Ethereum holdings by BitMine, the largest institutional holder of the second-largest cryptocurrency, have resulted in $6.95 billion in 'paper' losses. Some institutions, like Trend Research in Hong Kong and Japanese financial firm Nomura, are already reducing their positions.