Daily Market Update: BTC Holds $90K as Markets Price In Fed Cut and Nvidia Lands China Chip Deal

TLDR

• Bitcoin is trading around $90,000 as year-end liquidity dries up and traders expect a Federal Reserve rate cut this week
• Open interest in BTC and ETH perpetual contracts has dropped by nearly half since October, weakening market absorption capacity
• Traders have already priced in a 25 basis point Fed rate cut with 89% probability, focusing more on future guidance
• Nvidia stock jumped over 2% after Trump approved sales of H200 AI chips to China with 25% payment to US government
• Stock futures edged higher Tuesday morning with Nasdaq 100 futures leading gains ahead of Fed policy meeting

Bitcoin traded near $90,000 on Monday as thin year-end trading conditions created a volatile environment for crypto and stock markets. The price movement came as traders prepared for the Federal Reserve’s final policy decision of 2025.

Market participation has dropped sharply in recent months. QCP Capital reported that perpetual contract open interest for both Bitcoin and Ethereum has fallen by nearly half since October.

This decline means the market has less capacity to handle large directional trades. Sharp price swings over the weekend highlighted how reduced liquidity can amplify volatility.

Traders have already priced in this week’s expected 25 basis point rate cut from the Federal Reserve. According to CME FedWatch tool data, markets now show an 89% probability of a quarter-point reduction.

That probability has climbed from about 67% just one month ago. Polymarket betting odds suggest traders expect a pause in rate cuts come January.

The focus has shifted from the rate decision itself to what Fed Chair Jerome Powell will say about future policy. Gracie Lin, CEO of OKX Singapore, told CoinDesk that diverging central bank policies are creating uneven macro signals across global markets.

The Bank of England remains divided on its policy path. The European Central Bank is holding its current stance while the Bank of Japan prepares to tighten at yield levels not seen since 2007.

Nvidia Secures China Chip Sales Deal

Stock futures moved higher Tuesday morning after President Donald Trump announced a deal for Nvidia. The chip maker can now resume shipments of its H200 AI chips to China under specific conditions.

Trump posted on Truth Social that Nvidia can sell to approved customers in China and other regions. The arrangement requires 25% of sales value to be paid to the US government.

Nvidia shares rose over 2% in extended trading following the announcement. Trump stated that Chinese President Xi Jinping responded positively to the arrangement.

The deal provides some stability for Nvidia’s China business after months of trade policy uncertainty. Dow Jones Industrial Average futures showed little change while S&P 500 futures ticked up 0.1%.

Nasdaq 100 futures hovered slightly above baseline levels. The indexes had posted modest losses on Monday, breaking a string of recent gains.

Market Structure Shifts

The recent clearing of leveraged positions has changed market dynamics. Lin explained that removing overcrowded trades has given prices more room to move without forced liquidations.

Bitcoin pushed back toward $91,000 as this market reset took hold. Ether edged slightly lower but continued to outperform relative to Bitcoin.

The cryptocurrency briefly touched its strongest level against Bitcoin in more than a month. Gold dipped slightly on Monday as traders maintained caution ahead of the Fed meeting.

Markets are now waiting for Powell’s guidance on future rate moves. Corporate earnings reports from Oracle, Broadcom, Costco and Lululemon are due this week.

The combination of the Fed meeting and major earnings reports will test current market positioning. Traders expect direction will depend more on Fed guidance than the rate cut itself.

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