Will the Fed Unlock Bitcoin's Long-Awaited Santa Rally?

Source: Coindoo Original Title: Will the Fed Unlock Bitcoin’s Long-Awaited Santa Rally? Original Link:

Bitcoin enters the final stretch of the year with mixed signals. On one hand, liquidity indicators are improving and expectations for a Federal Reserve rate cut are surging.

On the other, traders remain anxious, scarred by months of cautious institutional behavior and repeated macro surprises. The tug-of-war between these themes now shapes the debate around whether the long-discussed “Santa rally” can finally materialize.

Key Takeaways

• Rising liquidity and expected Fed cuts could spark a December rebound.
• Powell’s tone may determine whether a Santa rally actually forms.
• Bitcoin shows early stabilization after retesting major support levels.

A Market Waiting for Permission to Recover

Instead of behaving like a market gearing up for a holiday push, Bitcoin has been moving like an asset waiting for external confirmation. Much of that hesitation stems from Federal Reserve policy.

Investors appear unwilling to commit until they see how the central bank positions itself for 2026.

A certain compliance platform’s institutional division argues that, beneath the surface, conditions are quietly turning favorable. Their latest analysis points to strengthening liquidity and a dramatic rise in the probability of a December rate cut — now sitting at 92%. This analysis flagged this possibility months ago, noting in October that global money-supply trends pointed to weakness through November before momentum flipped around year-end.

Those signals are indeed emerging. What hasn’t shifted yet is sentiment: fear still dominates trading behavior, and ETF activity hasn’t fully recovered after cooling off in recent weeks.

The Fed’s Messaging Could Override Everything Else

For many analysts, the potential cut is only half the story. Jerome Powell’s tone may matter more than the decision itself.

Coin Bureau’s Nic Puckrin believes that if the Fed lowers rates and declares an end to quantitative tightening on December 10, Bitcoin would have clear runway for a short-term burst — barring an unforeseen geopolitical shock. But investors are preparing for the opposite scenario as well: any hint that Powell wants tighter conditions in early 2026 could immediately suffocate the rally before it begins.

This sensitivity is not hypothetical. Bitcoin’s November decline was widely attributed to Powell’s earlier hawkish remarks, which pressured risk assets across the board.

Technical Structure Shows Signs of Stabilizing

Away from macro narratives, some analysts see early evidence that selling pressure may be fading.

Axis co-founder Chris Kim notes that Bitcoin has already retested the $80,000 region and the 100-week average, both of which tend to act as longer-term support during strong cycles. Combined with renewed ETF accessibility — including Vanguard’s decision to enable trading — Kim sees “incremental positives” accumulating.

In his view, the dominant market driver remains macroeconomic, but the technical backdrop is no longer working against bulls.

Looking Ahead to 2026: A Potential Policy Shift

A new element has recently entered trader discussions: the possibility that National Economic Council Director Kevin Hassett could become the next Federal Reserve Chair.

Hassett is regarded as far more dovish than current leadership, and such an appointment would likely reshape expectations for monetary policy heading into 2026.

A more accommodative Fed chief, combined with easing financial conditions, would create a very different environment for Bitcoin’s next major cycle.