Bitcoin Stalls as Dollar Weakens and Fed Rate Cuts Boost Crypto Optimism
The bitcoin price holds steady at around $90,000 per bitcoin, having failed to capitalize on the recent upward movements of gold and silver in the last few weeks. As traders speculate on the potential “destruction” of the U.S. dollar by 2026, analysts are raising concerns about the dollar’s most significant annual decline since 2017—plummeting nearly 10% against a range of major currencies. This trend is expected to persist into the following year, fueled by anticipated interest rate reductions from the Federal Reserve, which may result in a rise in bitcoin prices. “The Fed is bucking the trend in terms of global central banks … it is still very much in easing mode,” stated James Knightley in an interview. This week, the most recent meeting minutes from the Fed revealed that policy makers remain divided, even after their decision to cut rates.
During the meeting on December 9-10, officials presented various viewpoints, indicating that interest rates might stay unchanged “for some time.” The minutes stated, “With respect to the extent and timing of additional adjustments to the target range for the federal funds rate, some participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for some time after a lowering of the range at this meeting.” Mark Sobel noted, “Trump’s erosion of the fundamental pillars of dollar dominance may be a very slow, long-term burn, but it still weighs on participants’ minds,” even in light of signs suggesting a pause. According to a source, the market is currently pricing in an 82% chance that the Fed will keep interest rates unchanged at its late January meeting.
Polymarket is indicating a 96% likelihood of an interest rate cut by June. U.S. president Donald Trump suggested this week that he “still might” remove Federal Reserve chair Jerome Powell, alluding to the potential announcement of his successor for “January sometime.”
Trump has called on the Federal Reserve to lower interest rates until 2025, amid speculation that Powell could be replaced by a Trump ally who shares his view that rates should be much lower than the current 3.5%-3.75%. “Loosening monetary policy is likely around the corner—with bitcoin being a leading beneficiary of cheaper and more abundant dollars,” Timot Lamarre stated. “One of the key catalysts for the crypto space in 2026 is interest rate cuts next year,” stated Owen Lau. “Retail will be more excited to get into crypto, institutions will be more excited to get into crypto,” Lau stated during an interview.
