The upcoming Federal Reserve meeting will trigger Bitcoin’s price to surge dramatically after it breached $92,000 on Monday, analysts say.
A Fed decision on Wednesday to inject more money into the banking system will send the $1.8 trillion crypto “sharply higher,” analysts David Brickell and Chris Mills of the London Crypto Club said in their weekly newsletter.
They predict “a dovish surprise” where the Fed indirectly increases money supply through a creative bond-buying scheme.
“Now, we’re moving into a continued rate cutting cycle accompanied by balance sheet expansion as the Fed effectively turns on the money printers to monetise the deficit,” the pair said. “That’s a powerful, structural tide to be swimming against in the new year.”
The prospect of the Fed meeting triggering Bitcoin’s price to skyrocket is an enticing idea for traders who’ve watched the value of their crypto holdings plummet over the past two months, wiping out essentially all gains made over the year.
Central bankers’ week
A potent mix of macroeconomic news and policy momentum is fuelling sentiment — the Fed Wednesday meeting being the primary factor.
“The policymakers are expected almost universally to cut rates 25bps for a third time this year,” Ed Yardeni, president of Yardeni research, wrote.
The CME FedWatch tool shows a 86% chance of a 0.25% rate cut on Wednesday. Bettors on Polymarket are even more optimistic, anticipating a 94% chance.
Lower interest rates have historically been positive for risk-on assets like crypto because they disincentivise investors to hold bonds by reducing risk-free yield.
But all eyes are not just on the US central bank this week.
“The week ahead is rich with opportunities to assess the severity of headwinds emanating from Trump’s trade war,” Yardeni said, adding that key central bank decisions are expected this week in Canada, Australia, and Switzerland.
To add to the flurry of sovereign excitement, China and Taiwan are set to publish fresh export data which could impact financial policies, while Japan may increase interest rates to fight yen inflation.
Meanwhile in DC
Momentum continues to snowball in Washington.
After a decade of industry lobbying, the Commodity Futures Trading Commission finally authorised the trading of spot crypto products on federally regulated exchanges, acting chair Caroline Pham announced last week.
Securities and Exchange Commission Chair Paul Atkins told Fox Business on December 3 that the US financial system is moving rapidly toward tokenisation.
“It’s the way the world will be… maybe not even in ten years, maybe even a lot less time, maybe a couple of years from now.”
While those factors all potentially points to a gush of bullish sentiment to cap of the year, not all analysts are convinced of an upcoming Santa rally.
Bloomberg Intelligence strategist Mike McGlone, who has made several bearish calls of late, said on Sunday that he’s betting that Bitcoin will trade below $84,000 by the end of 2025.
Crypto market movers
Bitcoin is up 3.2% over the past 24 hours, trading at $91,900.
Ethereum up 4.2% over the past 24 hours trading at $3,150.
