Strategists warn the year-end crypto rally may stall if Chair Powell signals a pause in future rate cuts
Bitcoin (BTC) climbed sharply on Tuesday, briefly approaching the $94,000 mark as investors positioned themselves ahead of a pivotal Federal Reserve decision. The surge reflects growing optimism that the central bank will announce a 25 basis point rate cut at the conclusion of its two-day policy meeting on Wednesday. Yet despite the bullish price action, analysts are urging caution, warning that the year-end “Santa rally” many crypto investors hope for may not materialize.
Market expectations for a rate reduction are nearly unanimous, with both the CME FedWatch tool and prediction platform Polymarket indicating strong confidence in this week’s cut. However, the real market catalyst may lie in Fed Chair Jerome Powell’s tone during his post-meeting press conference. Investors are increasingly betting that Powell may hint at a potential pause in January, signaling that policymakers remain wary of continued easing amid persistent inflation pressures and signs of a cooling labor market.
“For Bitcoin, sentiment could shift quickly,” said Nic Puckrin, investment analyst and co-founder of Coin Bureau. “If Powell does indeed deliver a hawkish speech, the likelihood of a Santa rally for Bitcoin diminishes.”
A more restrictive policy outlook could temper enthusiasm in the crypto market, which has historically thrived during periods of monetary easing. While Bitcoin’s rally reflects strong underlying demand and anticipation of looser financial conditions, a shift in Powell’s messaging could introduce volatility and dampen momentum heading into the new year.
For now, traders remain cautiously optimistic. Bitcoin’s resilience near $94,000 suggests confidence, but all eyes remain on the Federal Reserve—a reminder that, even in the decentralized world of crypto, traditional monetary policy still casts a long shadow.
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