Analysts: A “Christmas Rally” Is Now Unlikely

On Thursday, after the expected 25-basis-point interest rate cut by the Federal Reserve, the price of shares dropped to around $90,000. However, analysts viewed the decision as cautious, which led to a decline in risk assets despite a brief rally ahead of the meeting.

Ahead of the announcement, BTC rose to $94,500 before sharply reversing, continuing a year-long trend: seven of the last eight FOMC meetings have been followed by a Bitcoin decline.

Recent developments pushed Bitcoin lower after its latest attempts to return to the area near $90,000, while Ether traded below $3,200 and the broader crypto market fell as altcoins lost value. Over the past 12 months and year-to-date, the sector has shown negative performance.

Powell’s Tone: Dovish at First Glance, Hawkish in Voice

The Fed’s rate cut was accompanied by remarks that were occasionally soft but in general reaffirmed a cautious stance toward monetary policy.

In the statement by Federal Reserve Chair Jerome Powell, the following was confirmed:

• According to the committee’s projections, only one more rate cut is planned for 2026 — unchanged from September.

• Additionally, the 9–3 vote reflected the highest level of dissent since 2018, highlighting divisions within the committee, which Powell said is operating in a “very challenging” environment.

Several analytical reviews described the outcome as a calibrated signal rather than a sharp pivot and noted that the Fed’s shift resembles the cautious stance displayed after the previous rate-cut cycle. Analysts also noted that the Fed raised its growth forecast and lowered inflation expectations but introduced language suggesting higher conditions for further policy easing.

Coin Bureau co-founder Nick Pakrin said the rate cut “was not as dovish as some expected,” but the number of dissenters and the Fed’s expectation of only one cut next year “introduce a new layer of uncertainty” for risk assets. “This is not enough to trigger a Christmas rally for Bitcoin,” he said.

“It’s Not Enough to Set New All-Time Highs by Easter”

Alongside the rate cut, the Fed announced that over the next 30 days, starting December 12, it will purchase $40 billion in Treasury bills to maintain sufficient reserves in the financial system. Officials emphasized that this step is not quantitative easing, but analysts noted that it nevertheless creates supportive liquidity conditions.

Matt Howells-Barby, Head of Growth at Kraken, stated that the combination of a neutral stance on rates and reserve-management purchases could support crypto markets into early 2026. However, he warned that the upcoming leadership change at the Fed may shift the balance toward tighter monetary policy, limiting the chances of aggressive easing early next year.

Paul Howard of Wincent added that the Fed’s wait-and-see stance is largely keeping crypto in place: “Any monetary easing is welcome,” he said, “but the scale of the cut and the committee’s conflicting statements are not enough to reach new all-time highs by Easter.”

Despite ETF Inflows, Confidence Remains Low

Amid the policy vote results, ETF flows continued to show an overall positive picture.

On Tuesday, U.S. spot Bitcoin ETFs saw $224 million in inflows, including $193 million into BlackRock’s IBIT. By comparison, Ethereum funds saw $57.6 million, and Solana and XRP funds received a combined $15 million, according to The Block. Despite steady demand, price performance remained muted.

BRN’s Head of Research Timothy Mysir argued that the price decline after the cut reflects a market that “welcomed the cut but not the guidance,” describing the day’s move as another version of the “hawkish cut” traders expected. He added that institutional demand remains strong: wallets holding 10 to 10,000 BTC accumulated roughly 42,565 BTC since December 1. However, retail selling continues to cap gains.

Exchange balances continue to fall, deepening structural scarcity. However, short-term holders are reducing their positions, creating an opposing force that keeps BTC within a tightening range, the BRN analyst noted.

“The rate cut provides support, but it’s conditional,” Mysir said. “Institutions are buying dips while retail is selling under stress. The question is whether ETF demand can continue to absorb supply until the macroeconomic environment stabilizes.”

See also: "Silver hits a new all-time high at $63 amid crypto market decline"

#Fed #Crypto Market

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