Bitcoin’s potential ‘Santa’ rally might be fueled by supportive macroeconomic factors, including the upcoming Federal Reserve interest rate decision, though any hawkish comments from central bank officials could dampen investor sentiment.
According to Coinbase Institutional, enhanced liquidity conditions and increasing chances of a Federal Reserve interest rate cut might drive a recovery in the crypto market this December.
“We believe crypto could be set for a December recovery as liquidity levels improve, with Fed cut odds rising to 92% (as of Dec 4), and macro tailwinds developing,” stated Coinbase in a report released on Friday.
In October, Coinbase anticipated “weakness” in the crypto market prior to a “December reversal,” guided by its custom global M2 money supply index, which evaluates the total amount of outstanding fiat currency.
Nonetheless, market sentiment remains largely “dominated” by fear, as both institutional and retail investments are “hesitant to engage,” keeping markets stagnant ahead of a recovery in exchange-traded fund (ETF) inflows, according to Coinbase.
Related: Bitcoin stays around $90K as whales exploit the Ethereum dip: Finance Redefined
Fed interest rate cut crucial for Bitcoin’s momentum in early 2026
Market analysts have also highlighted the chance of a “Santa rally” following the Fed’s rate cut—a market trend where assets experience temporary gains around Christmas.
According to Nic Puckrin, crypto analyst and co-founder of the Coin Bureau educational platform, Bitcoin’s (BTC) prospects for the first quarter of 2026 may depend heavily on comments from Federal Reserve Chair Jerome Powell. He mentioned to Cointelegraph:
“Should the Fed cut rates on December 10th and halt QT, there’s little that could hinder a Santa rally for Bitcoin—except perhaps any significant geopolitical shock.”
“However, investors will closely analyze Jerome Powell’s statements during the press conference to anticipate 2026 monetary policies; any hawkish signals might limit the rally,” he added.
Related: Cantor reduces Strategy target by 60%, asserts forced-sale concerns are overstated
Other analysts attributed the selling pressure in November for Bitcoin to Powell’s former hawkish statements but predict a recovery in December. This group includes Chris Kim, co-founder and CEO of Axis, a quantitative trading fund managing $100 million in live capital.
“Overall, we anticipate a recovery,” as the “primary driver currently is macro,” Kim told Cointelegraph, adding:
“From a technical standpoint, the market has already re-tested the ~$80k level and the 100-week average. We’re also observing positive signs like Vanguard permitting ETF trading.”
A further fundamental influencer for crypto assets is the rising speculation that National Economic Council Director Kevin Hassett may be named the next Federal Reserve Chair in early 2026, a move that could introduce a “notably more dovish” policy approach, according to Kim.
Magazine: Bitcoin mining sector ‘facing extinction in 2 years’ — Bit Digital CEO
