Bitcoin surged to its highest level in three weeks on Tuesday evening, marking what analysts at blockchain intelligence firm Santiment described as a “much-needed rebound” that has quickly reignited bullish sentiment across social media.

The rally, however, was short-lived, and analysts now caution that macroeconomic uncertainty — particularly Wednesday’s Federal Reserve interest rate decision — could inject fresh volatility into the cryptocurrency market.

Bitcoin briefly jumped to $94,625 on Coinbase in late trading on Tuesday, its strongest level since November 25, according to TradingView data.

The sudden rise triggered what Santiment called an explosion of online commentary featuring terms such as “higher” and “above,” suggesting traders were swiftly “FOMOing back in and expect higher prices.”

But the enthusiasm faded quickly.

By the time of writing, Bitcoin had slipped back to around $92,530, leaving analysts debating whether the latest move represents the beginning of a broader recovery or another short-lived spike.

Santiment noted that “markets move opposite to the small traders’ behavior,” implying that the rapid retracement may reflect overexuberance among retail market participants.

The timing of Bitcoin’s rally has drawn particular attention because it comes just ahead of the Federal Reserve’s widely anticipated interest rate announcement on Wednesday.

Futures data from CME Group show an 88.6% probability of a 0.25% rate cut, a development that some analysts believe has contributed to Bitcoin’s short-term strength.

“Bitcoin is likely rallying on rate cut expectations, but right now it’s difficult to say what will happen after tomorrow’s Fed meeting,” said Jeff Mei, chief operations officer at the BTSE exchange.

He warned that any signal of hesitation from the Fed on additional rate cuts in early 2025 could prove bearish for crypto markets.

CME futures markets currently assign a 21.6% probability to another quarter-point cut in January.

Mei cautioned that traders should be wary, recalling a past episode in which markets rallied into a Fed cut only to “tank afterward” when policymakers signalled concerns about inflation.

Other analysts echoed similar caution, with the market commentator known as “Sykodelic” describing upcoming price action around the Federal Open Market Committee (FOMC) decision as “very volatile.”

While some traders welcomed the rally, others expressed skepticism about the way Bitcoin jumped so quickly and without sustained follow-through.

Long-term Bitcoin investor “NoLimit” described the move as “pure manipulation” to his 53,000 followers on X.

According to the investor, the spike “doesn’t look organic at all,” citing thin order books that make it relatively inexpensive to push prices higher, along with a series of massive market buy orders concentrated within a short period.

He added that after the surge, there was “zero continuation, just immediate stalling,” which he believes reflects a classic engineered pump aimed at triggering FOMO so larger players can “offload at better prices.”

As Bitcoin trades below its brief Tuesday peak, markets now turn to the Federal Reserve, a pivotal event expected to determine whether the cryptocurrency can build on its rebound or retreat further in the coming days.

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