Bitcoin Is Rebounding. Keep an Eye on This Level.

Bitcoin and other cryptocurrencies plummeted last week. (YASIN AKGUL/AFP via Getty Images)

Key Points

• Bitcoin is trading at $88,844, 29% below its early October record high of $126,273, after a weekend rebound.
• The cryptocurrency’s struggle may stem from investors who bought around $90,000, now facing potential margin calls.
• Upcoming economic data and Federal Reserve interest rate decisions could significantly impact Bitcoin’s future price.

Bitcoin was rebounding on Monday afternoon after last week’s selloff despite a setback earlier in the day.

The cryptocurrency was up 1.5% to around $88,844, according to data from CoinDesk. It’s trading 29% off the record high of $126,273 it hit in early October.

Other tokens were slightly higher, too. Ethereum was up 5.3% and Solana by 4.7%. XRP was surging, up 10.5%.

Created with Highcharts 9.0.1Bitcoin priceSource: CoinDeskNote: XBX indexAs of Nov. 24, 11:55 p.m. ET

Created with Highcharts 9.0.1Nov. 16Nov. 2477,50080,00082,50085,00087,50090,00092,50095,000$97,500

The price of Bitcoin rose by nearly $4,000 over the weekend, easing some fears following last week’s crypto crash.

But it still appears to have lost its correlation with other risk assets. The tech-heavy Nasdaq Composite was up 2.6%.

One reason that Bitcoin is struggling despite a broader market rebound could be that many investors bought in at around $90,000. With it now trading below that level, they may be hesitant to dip into their pockets again, especially if they borrowed money to buy it and are now facing margin calls.

The next few days could well be crucial for cryptos, with a slew of delayed economic data set to be published ahead of Thanksgiving. If that strengthens the case for the Federal Reserve to cut interest rates in December, then that could boost Bitcoin and its peers. When borrowing costs are lower, they become more appealing relative to interest-bearing assets like bonds and savings accounts.

But if the odds shift in favor of the Fed keeping rates unchanged, that could spark a further crypto selloff. A key level to watch for Bitcoin is $80,000, according to Interactive Investor’s head of investment Victoria Scholar.

“A break below this technical support level could provide further fuel to the crypto bears, adding to downside pressure,” she wrote in a research note on Monday.

“The speculative asset is highly sensitive to risk sentiment and with growing fears of a market crash or correction amid the lofty valuations seen within tech and AI, Bitcoin has found itself in the firing line with many investors liquidating their holdings,” Scholar added.

Write to George Glover at george.glover@dowjones.com