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Bitcoin price is under the spotlight as markets anticipate a potential Federal Reserve rate cut that could drive fresh momentum.
Notably, the CME FedWatch Tool has indicated a 74.5% possibility of a 0.25% rate cut by the Federal Reserve at its forthcoming Dec. 18 meeting. This comes after the 50 bps rate cut in September and 25 bps last month.
If it materializes, this move could lower the federal fund’s target rate to a range of 4.25% to 4.5%. Such a cut, widely perceived as a dovish signal, will likely bolster the price action of Bitcoin and altcoins.
The Fed’s anticipated shift follows months of inflation data that suggests prices are stabilizing. Federal Reserve Governor Christopher Waller recently voiced support for the cut, citing downward inflation trends.
Similarly, Federal Reserve officials, including Raphael Bostic, have hinted at an open mind on whether the bank should cut rates. Market expectations for such a cut have steadily risen in recent weeks.
Meanwhile, the Bitcoin (BTC) price, which saw a massive uptrend in November, hit the $99,655 resistance on the path to $100,000 before facing a pullback driven by profit-taking trades from long-term holders.
BTC now changes hands at $96,812 at press time, up 1.52% over the past 24 hours. The price has continued to consolidate between $93,000 and $96,000, suggesting the market awaits a major catalyst to push higher.
Speaking with crypto.news, Maksym Sakharov, co-founder of WeFi, argues that a dovish Fed move could provide the necessary momentum.
He notes that rate cuts reduce borrowing costs and increase liquidity, conditions that historically favor Bitcoin due to its inflation-hedging appeal.
“Freed-up liquidity often translates to more fiat in circulation, driving inflation concerns and prompting investors to seek stable alternatives like Bitcoin,” Sakharov observed.
Additionally, Bitcoin’s price actions are supported by a mix of factors, including institutional interest. Sakharov emphasized that the limited supply created by the halving, coupled with increased accumulation, could drive a breakout above $100,000.
He also pointed to the optimism surrounding pro-crypto policies from U.S. President-elect Donald Trump, a sentiment fueling market momentum.
“Beyond these macroeconomic projections, the market is still hyped about the emergence of Donald Trump as US President. The optimism that a pro-crypto President will take charge for four years helped push the price of Bitcoin above the $99,000 mark.”
Sakharov said.
“The combined impacts of incoming rate cuts and sustained BTC accumulation by institutional investors can propel the coin’s price above the $100,000 mark this year,” Sakharov added.
Notably, as the Federal Reserve’s meeting approaches, scheduled for December 17 and 18, market participants also have their eyes set on other economic indicators that could determine price action.
Upcoming employment data and holiday sales trends will further inform the central bank’s decision. However, any unexpected signs of persistent inflation could temper the Fed’s dovish pivot and dampen Bitcoin’s bullish outlook.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.