ARP Digital's Yusuf Fakhro says Bitcoin's relative strength and reduced leverage support its recovery, with the Fed's upcoming decision posing the next test.
Bitcoin ’s recent decline has not undermined its broader recovery prospects, as reduced leverage and easing selling pressure suggest the market remains structurally healthy, according to Yusuf Fakhro, partner at ARP Digital.
Bitcoin is trading near $82,700 after recovering from a recent drop below $80,500, outperforming Ethereum and the broader altcoin market despite ongoing macroeconomic uncertainty.
The leading crypto asset fell from approximately $86,000 before stabilizing in the low $80,000 range, as weakness in technology stocks and elevated Treasury yields weighed on investor appetite for risk assets.
Fakhro attributed the decline primarily to broader macroeconomic pressures rather than crypto specific factors in commentary shared with Crypto Briefing, noting that Bitcoin’s correlation with the Nasdaq has climbed to its highest level since June.
Despite the downturn, Bitcoin outperformed Ethereum and the wider altcoin market, finding support near the average acquisition price of spot Bitcoin exchange traded fund investors.
Fakhro said derivatives market conditions suggest Bitcoin has absorbed recent selling without experiencing a major liquidation cascade.
Funding rates have fallen to their lowest levels since June, while open interest has declined to five month lows, indicating traders had already reduced leveraged exposure before the latest decline.
The analyst argued that reduced leverage leaves the market in a healthier position, lowering the risk of forced selling during another period of volatility.
He also pointed to changes in Bitcoin’s ownership structure, suggesting that substantial amounts of older supply have moved into the hands of investors who accumulated near current prices and remained invested through the recent market downturn.
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With fewer persistent sellers, Fakhro believes a recovery in demand could support further gains once broader market sentiment improves.
He maintained his bullish outlook after previously identifying accumulation opportunities when Bitcoin was trading in the mid $60,000 range.
Bitcoin’s next major test could come from the Federal Reserve’s October 27 and 28 policy meeting, as persistent inflation and elevated energy prices complicate the outlook for interest rates.
US consumer prices increased 3.7% annually in September, accelerating from 3.4% in August and exceeding economists’ expectations of 3.6%. Core inflation, which excludes food and energy, reached 2.6%, reflecting continued price pressures across the economy.
Meanwhile, oil prices have remained elevated amid disruptions to shipping through the Strait of Hormuz and escalating tensions in the Middle East.
Brent crude surged to approximately $110 per barrel last week before retreating toward $108 on Monday, as traders assessed potential additional Russian oil supplies following changes to US sanctions.
Higher energy costs have reinforced inflation concerns, raising questions about whether the Fed will need to maintain restrictive monetary policy for longer.
According to CME FedWatch probabilities reported Monday, traders assigned approximately an 85% chance that the central bank would keep interest rates unchanged at 3.75% to 4.00% this month, with roughly 15% odds of a quarter point increase.
Despite expectations for an October pause, markets continue to price in the possibility of additional tightening before year end, with December rate hike probabilities approaching 92%.
Elevated borrowing costs and persistent inflation could continue weighing on risk assets, including Bitcoin, particularly if energy prices resume their upward trajectory.
For Fakhro, however, the recent decline has not undermined Bitcoin’s broader recovery prospects.
The analyst considers weakness toward the low $80,000 range a potential accumulation opportunity, supported by reduced leverage, diminishing selling pressure and stronger demand than the rest of the crypto market.
He cautioned that a decisive break below that support area would warrant a more defensive outlook, while the upcoming Fed decision could determine whether Bitcoin extends its recovery or faces another period of macroeconomic volatility.