Today’s Federal Reserve meeting will set the stage for Bitcoin to rally into the new year, according to analysts.
Their bullishness hinges on the expectation that Fed Chair Jerome Powell will deliver a 0.25% interest rate cut and provide crypto traders with a much needed breather.
The CME FedWatch tool shows an 88% probability of a quarter-point cut today, with Polymarket bettors even more confident at 96%.
“I expect the digital asset space to react positively,” Andrew Forson, president of crypto firm DeFi Technologies, told DL News.
“Any rate cut reduces the riskiness of digital assets in relation to US Treasuries,” Forson said. “The returns digital assets need to generate in order to be considered healthy or strong are moderated by any rate cut.”
While there is dissent within the Fed, with some policymakers fearing inflation, Powell is seen to successfully push through the last rate cut of the year.
Several top Fed officials, including Governor Christopher Waller, New York Fed President John Williams, and San Francisco Fed President Mary Daly, have all hinted in recent weeks that policy easing is coming.
Lower interest rates are usually good for risk-on assets like crypto or tech stocks because they disincentivise investment in safe-haven bonds by reducing yields.
‘Reversal point’
The Fed’s Open Market Committee meeting lands as the cryptocurrency market sits $1 trillion below its all-time high set in October. Traders have already “priced in” the event, analysts told DL News.
Bitcoin’s price is hovering above $92,000 after rallying 12% from its November lows.
Bitcoin exchange-traded funds saw $152 million in inflows on Tuesday, DefiLlama data shows.
Broader markets are sideways. US stocks wavered on Tuesday as traders avoided big moves ahead of the decision, Bloomberg data shows.
Nvidia was flat even after President Donald Trump approved the company’s return to China with a 25% surcharge on its H200 chip exports.
“The market may be approaching a reversal point,” Mark Pilipczuk, research analyst at CF Benchmarks, told DL News. He highlighted a “volatility spike” signal in Bitcoin which has “historically marked exhaustion in market drawdowns.”
“Short-term performance after this signal is generally bullish,” Pilipczuk said, citing historic return patterns that suggest Bitcoin will be trading above $100,000 going into the next year.
“Over longer time frames, the pattern turns more decisively bullish,” he said. “Every historical 12-month outcome has been positive, with gains around +140%,” he said. That means $220,000 per Bitcoin.
Economists polled by Bloomberg see two more rate cuts in 2026.
Crypto market movers
Bitcoin up 2.5% over the past 24 hours, trading at $92,600.
Ethereum is up 6.5% over the past 24 hours trading at $3,330.
