Bitcoin is holding above the $100,000 mark, buoyed by rising risk-on sentiment amid monetary easing by major central banks, according to an analyst.

“With the ECB rate cut, and the People’s Bank of China recently cutting rates for the first time in 14 years, a Fed rate cut could amplify global liquidity conditions," Kooner told The Block. "This easing could spur capital flows into risk-on markets, including crypto."

Bitfinex Head of Derivatives Jag Kooner pointed to the European Central Bank’s decision on Thursday to lower its deposit rate for the fourth time this year, cutting by 25 basis points to 3%. This move comes in response to slowing inflation and weakening economic growth across the eurozone.

At the same time, speculation is rising over further monetary easing from the People’s Bank of China. While China implemented its first rate cut in over a decade in October, some Wall Street banks—including Goldman Sachs and Morgan Stanley—expect additional rate reductions in 2025. Projections suggest 40 basis points of cuts to China’s main policy rate next year, which would mark the largest annual reduction since 2015.

Markets are also closely watching the U.S. Federal Reserve ahead of the Federal Open Market Committee meeting on Dec. 18, with growing speculation about a potential rate cut. Kooner noted that anticipation of a potential 25 basis point rate cut by the Federal Reserve, alongside easing measures in Europe and China, has boosted optimism across risk-on markets, including cryptocurrencies. He added that this rate cut speculation, coupled with the typical year-end optimism seen in December, “may fuel a potential ‘Santa rally,’ driving bitcoin and other cryptocurrencies higher as investors allocate more capital into the space.” 

The CME's FedWatch tool is currently giving the likelihood of a 25-basis point cut at next week's FOMC meeting at over 96%. Lowered interest rates typically drive investors to redirect capital to riskier assets like bitcoin.

Kooner added that a rally is increasingly likely following the recent open interest wipeout in the derivatives market, which saw $1.7 billion in liquidations on Monday. “Now that excessive leveraged long positioning has been removed from the markets, this sets the stage for the next leg up to begin over the next few weeks,” he said.

Bitcoin is currently trading at around $100,232 at the time of writing, according to The Block's Price Page.

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