Cryptocurrencies have once again shown a notable buying bias over the past weeks of trading, achieving a short-term recovery as November comes to an end. Temporary buying pressure has remained firm as several events point toward a more dovish monetary policy in the United States, which has partially stabilized dollar movements and helped revive appetite for risk assets — such as the crypto market. If this perception of lower interest rates continues, it is possible that the buying pressure now forming in the crypto market could hold through the short term.
Is Risk Appetite Returning?
Although this week was not among the most volatile due to the U.S. holiday, it did leave behind several relevant developments tied to the Federal Reserve. The expectation that the institution may continue with interest rate cuts toward the end of 2025 has gained strength again. The CME Group probability model now shows an 86.9% probability that U.S. interest rates will be lowered by 0.25%, a significant increase compared to last week, when odds were still below 50%.
Source: CMEGROUP
In part, the Federal Reserve’s persistent indecision has started to reduce the appeal of safe-haven markets such as U.S. Treasury bonds and, simultaneously, the U.S. dollar, which showed slower movements throughout the week. Bond yields fell below the 4.00% reference zone, creating room for risk appetite to recover. This shift has benefited the crypto market, which had lost demand weeks ago. As safe-haven assets like bonds lose attractiveness, cryptocurrencies can receive capital flows seeking higher short-term returns.
This change in market perception is also reflected in the behavior of Bitcoin’s Open Interest, which measures the total number of open positions in the market. The indicator has shown a steady recovery to 29.3 billion, alongside a rebound in BTC’s price. This signals that selling positions have decreased while buying positions have increased consistently throughout the week.
Source: Cryptoquant
Thus, the renewed expectation of lower rates for December appears to have supported the recovery in crypto appetite. If this outlook continues reducing the appeal of safe-haven assets and strengthening flows toward risk assets, the crypto market may maintain consistent buying pressure in the coming sessions.
Bitcoin Compared to Other Markets
Recent movements in Bitcoin (BTC) have begun to show a positive correlation coefficient with other risk markets such as the SPX index, surpassing the neutral zone of 0 and reaching positive territory. This suggests that, to some extent, Bitcoin has started to replicate the upward movements seen in U.S. equity indices. However, it is important to keep in mind that this coefficient can change over time.
This phenomenon shows that as equity indices have recovered in the short term, Bitcoin —the benchmark cryptocurrency— has displayed similar behavior. This aligns with the rebound in risk appetite across financial markets, benefiting both equities and crypto assets. With this in mind, if risk appetite continues to hold, the crypto market may continue to benefit. Still, key data from the Federal Reserve will be necessary to confirm whether this trend can persist into the end-of-year period.
Source: Data – TVC, StoneX, Tradingview
In terms of volatility, the week was relatively calm for both financial markets and the crypto sector. By the end of the week, major cryptocurrencies showed movements below their weekly average, generating a period of stability. This may reduce fear of aggressive swings like those seen in previous weeks and help sustain a sense of calm that could support more stable demand in the short term.
Source: Data – TVC, StoneX, Tradingview
Thus, as positive correlation with traditional risk markets continues and volatility remains relatively stable, the cryptocurrency market may benefit from a gradual rise in risk appetite, which could support consistent buying pressure in the coming sessions.
Confidence Begins to Recover
Although a general sense of caution remains, it is important to highlight that the Crypto Fear and Greed Index has shown a notable recovery this week. The index now fluctuates around 20 points, finally moving out of the “extreme fear” category and returning to the “fear” zone in the short term.
Source: Coinmarketcap
This gradual improvement in confidence indicates that a more generalized buying bias has started to emerge in the crypto market. However, it may still be necessary for confidence indicators to return at least to the neutral zone to confirm a fully solid buying trend. If these indicators fail to recover further in the short term, the risk of renewed selling pressure affecting cryptocurrencies in the coming weeks could increase.
Written by Julian Pineda, CFA, CMT – Market Analyst
Follow him at: @julianpineda25
