Bitcoin Touches Record $106K Before Retreating on Fed’s Hawkish Rate Cut Concerns
Bitcoin (BTC) surged past $106,000 during early Asian trading hours, hitting a fresh all-time high before pulling back to $104,500. The retreat came as market concerns grew over a potential “hawkish rate cut” from the U.S. Federal Reserve (Fed).
The Fed is widely expected to lower its benchmark interest rate by 25 basis points to a range of 4.25% to 4.5%, marking a total 100-basis-point reduction since September. However, investors fear the accompanying commentary could signal a slower pace of easing next year, potentially curbing the bullish momentum across risk assets, including BTC.
The central bank’s decision, along with its dot plot (a summary of interest rate forecasts) and economic outlook, will be released on Dec. 18 at 14:00 ET, followed by a press conference with Fed Chair Jerome Powell.
In the previous dot plot from September, the Fed projected 2.5 percentage points of rate cuts by 2026, pushing interest rates below 3%. Analysts now believe the Fed may revise those expectations downward to reflect stronger-than-expected economic performance and persistent inflationary pressures.
Marc Chandler, chief market strategist at Bannockburn Global Forex, noted the likelihood of a “hawkish” cut. He stated, “We see risks of the Fed signaling fewer rate cuts next year compared to the September dot plot. The economy has shown greater strength than anticipated, and inflation remains uneven, giving the Fed room to remain patient.”
Should the Fed project slower easing, Treasury yields and the U.S. dollar may climb further, applying downward pressure on risk assets like BTC, which has thrived amid expectations of a dovish monetary stance.
However, several bullish factors could cushion Bitcoin from any sustained downside. Seasonality remains favorable for BTC, and President-elect Trump’s pro-crypto regulatory stance continues to provide positive sentiment. Additionally, global liquidity is expected to rise as central banks, including the Fed and China, move toward easing policies.
“While much focus will center on the pace of rate cuts, the broader macro backdrop remains supportive,” noted the founders of LondonCryptoClub. “The global central bank easing cycle and increasing liquidity, driven in part by China, continue to provide a bullish environment for Bitcoin.”
Later this week, markets will closely watch the release of the core Personal Consumption Expenditures (PCE) index—the Fed’s preferred inflation gauge. The data will indicate whether the recent uptick in inflation is a temporary blip or an early sign of persistent price pressures, potentially influencing the Fed’s stance moving forward.
For now, BTC traders remain on edge as they navigate a mix of macroeconomic developments, monetary policy signals, and lingering inflation dynamics.
