Bitcoin (BTC) Struggles at $100K Resistance as Fed Eyes 26 Basis Points Rate Cut in December

bitcoin‘s journey to surpass the psychological milestone of $100,000 has encountered significant resistance, with investors keenly awaiting policy decisions from the U.S. Federal Reserve that could provide the necessary impetus for a breakthrough. According to data from the CME FedWatch tool, expectations for a potential interest rate cut at the Federal Open Market Committee (FOMC) meeting on December 18 have risen to 73%. Analysts are anticipating a modest 20 basis points cut, a move that could have ripple effects across the cryptocurrency markets.

The prospect of a rate cut by the U.S. Federal Reserve holds particular significance for the crypto sector, which has often thrived on the liquidity that such monetary policy adjustments can inject into the market. Currently, the Fed’s interest rates stand at 4.6% to 4.8%, a slight reduction from the two cuts earlier this year that totaled 0.7%, bringing them down from highs not seen in two decades. A further reduction could see the rates fall into the 4.3% to 4.6% bracket, potentially setting the stage for a renewed bullish momentum in Bitcoin and other cryptocurrencies.

Bitcoin’s recent price activity has seen it persistently tested at the $100,000 level, with prices hovering around $95,500. Analysts like Chris Newhouse, who leads research at Cumberland Labs, note the robust buying interest from institutional players such as MicroStrategy, which continues to expand its Bitcoin holdings. Newhouse points out that the digital asset landscape is witnessing a shift in capital allocation strategies, with both institutional and retail investors diversifying their portfolios beyond traditional cryptocurrencies.

Adding to the optimism is the resurgence in spot Bitcoin ETF inflows, which have marked a positive trend after a period of stagnation. Recent data indicates inflows reaching approximately $356 million, with BlackRock’s IBIT accounting for a significant $340 million portion of this amount. This renewed interest from traditional financial entities underscores a growing confidence in Bitcoin’s viability as an investment asset.

Further fueling anticipation is the recent commentary from Fed governor Christopher Waller, who indicated a leaning toward supporting rate cuts in the upcoming months. This sentiment was echoed by New York Fed President John Williams, who, while addressing a New York business group, suggested that interest rates might decrease gradually, setting a tone of expectancy for December’s policy meeting.

As Bitcoin’s price consolidates, attention is also turning toward Altcoins, which have underperformed relative to Bitcoin’s recent gains. ethereum, XRP, and Cardano, in particular, are drawing investor interest as they remain poised for potential rallies. XRP, for instance, has seen its value climb to $2.70, supported by strong on-chain activity and investor sentiment, hinting at a broader shift in market dynamics.

In the crypto options market, there’s been a noticeable increase in the demand for downside protection linked to Bitcoin for December expiries, reflecting cautious optimism. Bitcoin futures, meanwhile, have seen moderate activity, with leverage remaining steady after Bitcoin’s peak around the $98,000 mark. Vetle Lunde, research chief at K33, highlights that traders who purchased Bitcoin in the $54,000 to $70,000 range are actively realizing profits, especially as the asset trades above $89,000.

With the upcoming inauguration of Donald Trump as the U.S. President, there is a cautious optimism about potential pro-crypto policies. Trump has already begun assembling a team of crypto-supportive policymakers and is rumored to be considering appointing a ‘crypto czar,’ a move that could further embolden the digital asset sector.

As the December FOMC meeting approaches, all eyes are on the Fed’s decision and its potential impact on the cryptocurrency market. The anticipated interest rate cut could act as a catalyst for Bitcoin to break past its formidable resistance, while also ushering in new opportunities for altcoins to shine amidst a shifting financial landscape.