Key Points
- Bitcoin reached a new all-time high of $106,488, driven by factors like the US election and increased institutional investments.
- The anticipated Federal Reserve rate cut is seen more as a confirmation than a trigger for Bitcoin’s rise.
Bitcoin reached a record high of $106,488, marking a 2.15% increase in the last 24 hours. This year, the leading cryptocurrency has surged 147% due to factors such as the recent US election and higher institutional investments.
A Federal Reserve rate cut is expected this week. However, this monetary policy shift is seen more as a confirmation than a trigger for Bitcoin’s rise.
Market Anticipation of the Rate Cut
Luis Buenaventura, head of crypto at GCash, is skeptical about the Fed’s impact on price trends. He points out that the market has been expecting the rate cut for weeks. Historical data, according to him, supports his view. It shows Bitcoin typically gains an extra 35% within two months after a 50% surge over 60 days.
A likely rate cut of 25 basis points would lower rates from 4.25% to 4.50%. This is indicated by the CME’s FedWatch Tool, which assigns a 93.4% probability to this outcome. If the Fed implements the cut, it will mark the second consecutive reduction following November’s cut.
Fed’s Decision and Its Potential Impact on Crypto
The Federal Reserve is set to announce its rate decision, interest rate projections, and economic forecasts on December 18 at 14:00 ET. Observers anticipate the Fed may revise its projections for rate cuts by the end of 2026, potentially lowering borrowing costs to below 3%.
Henry Elder, principal at UTXO Management, commented on the market’s response to recent inflation data. He said, “The market likes seeing inflation come in within expectations.” Traders are now debating whether $100,000 is a ceiling or a new floor for Bitcoin. The crypto market’s bullish sentiment appears robust, fueled by these macroeconomic indicators.
Since the US presidential election, Bitcoin’s 145% year-to-date rise has largely mirrored broader market optimism. Spot ETFs inflows and growing institutional interest have also provided substantial tailwinds for the alpha crypto. Ethereum has similarly benefited, climbing back to $4,000 — just 19% shy of its all-time high set in November 2021.
The political environment could significantly support Bitcoin’s ascent. Former President Donald Trump aims to create a strategic national Bitcoin reserve. However, detailed plans are absent. Eric Trump mentioned on Bloomberg TV that Trump would act as a strong advocate for the crypto industry.
Avinash Shekhar, Co-founder and CEO of Pi42, emphasized how macroeconomic conditions are driving Bitcoin’s expansion. He pointed out Bitcoin’s consistent upward momentum due to economic indicators and the anticipated Federal Reserve interest rate cuts.
