Bitcoin’s Bullish Reversal: Fed Rate Cut Speculation Ignites Rally Prospects

As market anticipation builds ahead of the December 2025 Federal Open Market Committee (FOMC) meeting, a significant shift in sentiment is fueling prospects for a major Bitcoin rally. Traders on prediction market platform Polymarket are currently pricing in a 92% probability of a 25-basis-point interest rate cut by the Federal Reserve. This overwhelming dovish expectation has catalyzed a dramatic transformation in Bitcoin's market posture, moving it from a bearish breakdown scenario to a potential bullish reversal trajectory. The cryptocurrency, which has been sensitive to macroeconomic monetary policy shifts throughout 2025, appears poised to respond positively to looser financial conditions. The central catalyst for this sentiment shift stems from the conflicting pressures facing Federal Reserve Chair Jerome Powell. On one side, persistent inflation concerns continue to challenge the Fed's dual mandate, while on the other, recently weakening jobs data suggests the economy may require stimulus to avoid contraction. This policy dilemma was highlighted during the October rate cut, which sparked notable internal dissent among five voting members of the committee, revealing deep divisions within the central bank's leadership regarding the appropriate path forward. Historically, Bitcoin has demonstrated an inverse correlation with interest rate expectations, often rallying when monetary policy turns accommodative. The current 92% probability of a December cut represents one of the strongest consensus forecasts in recent years, creating what analysts describe as a 'perfect storm' for cryptocurrency appreciation. Market technicians note that Bitcoin has been consolidating in a key support zone, and the fundamental catalyst of potential rate cuts could provide the necessary momentum to break through critical resistance levels. Furthermore, the evolving narrative around Bitcoin as a hedge against monetary debasement gains renewed relevance in a rate-cutting environment. As traditional safe-haven assets like bonds offer diminishing returns in falling rate scenarios, institutional and retail investors alike may increasingly allocate to digital assets seeking both yield and capital appreciation. The December FOMC meeting, scheduled for later this month, now stands as a pivotal event that could determine Bitcoin's price trajectory well into 2026, with many analysts revising their year-end targets upward in response to these shifting macroeconomic expectations.

Fed Rate Cut Speculation Fuels Bitcoin Rally Prospects

Market anticipation builds ahead of the December FOMC meeting, with Polymarket traders pricing a 92% probability of a 25-basis-point rate cut. This dovish expectation has shifted Bitcoin sentiment from bearish breakdown to potential bullish reversal.

Federal Reserve Chair Jerome Powell faces conflicting pressures - persistent inflation concerns versus weakening jobs data. The October rate cut sparked internal dissent among five voting members, but New York Fed President John Williams' November 21 remarks reinforced easing expectations.

On-chain metrics show bitcoin 'liveliness' trending upward, a historical precursor to bull markets. Analyst Michaël van de Poppe predicts short-term volatility preceding a sustained rally, noting typical pre-FOMC selling pressure.

ETF Analyst Rejects Bitcoin-Tulip Bubble Comparison, Highlights Resilience

Eric Balchunas, a senior ETF analyst, dismisses comparisons between Bitcoin and the 17th-century tulip bubble, emphasizing the cryptocurrency's enduring resilience. Bitcoin has weathered multiple severe market cycles—including six to seven major sell-offs and regulatory pressures—over its 17-year history, consistently rebounding to new all-time highs. Balchunas argues this longevity fundamentally distinguishes it from the ephemeral tulip mania, which collapsed within three years.

Critics often invoke the tulip bubble analogy to dismiss Bitcoin's volatility and speculative fervor. Yet Balchunas counters that Bitcoin's repeated recoveries demonstrate structural robustness, unlike the tulip market's irreversible crash. "The fact that it has endured so long alone makes it unfit for such comparisons," he asserts, underscoring its evolution from niche experiment to institutional asset.

Twenty One Capital to Debut on NYSE Under Ticker XXI, Transfers 43,500 BTC Ahead of Listing

Twenty One Capital, led by CEO Jack Mallers, is set to begin trading on the New York Stock Exchange under the ticker symbol XXI on December 9. The Bitcoin-focused firm is joining a growing list of cryptocurrency companies going public, buoyed by a favorable regulatory environment under President Trump.

In preparation for its debut, Twenty One Capital has transferred 43,500 Bitcoins from escrow wallets as part of closing its merger with Cantor Equity Partners. The tokens, sourced from Tether, Bitfinex, SoftBank, and private investments, were held in escrow during the approval process. Shareholders approved the merger on December 4, with the deal set to close by December 8.

Mallers publicly announced the transfer on X to preempt market speculation and potential FUD surrounding the large on-chain movement. The company plans to introduce a Bitcoin Per Share metric, reinforcing its commitment to transparency and institutional adoption.

Coinbase Premium Turns Critical — Analyst Highlights What It Signals For Bitcoin

Bitcoin's price continues its downward spiral, pushing investors toward capitulation. A recent on-chain analysis sheds light on the factors influencing Bitcoin's December performance, with a focus on the Coinbase Premium Index.

The Coinbase Premium Index, which tracks the price difference between Bitcoin on Coinbase and other major exchanges, has sharply declined. This metric is crucial for gauging US investor sentiment. The drop, beginning in late November and extending into early December, correlates with Bitcoin's price slump, suggesting US investors are driving the bearish pressure.

Historically, December has seen weaker readings for the Coinbase Premium Index compared to other months. This pattern aligns with the current trend, reinforcing concerns about subdued market activity during the year-end period.

Bitcoin Mining Stocks Slump Amid Rising Production Costs

Bitcoin mining equities faced a brutal week as production costs outpaced BTC's stagnant price action. The sector's aggregate market cap shed $1.23 billion between November 28 and December 5, with trading volumes collapsing 25.6% to $307.35k. Only six of 34 tracked mining stocks avoided losses—a stark contrast to November's rally.

Applied Digital (APLD) emerged as an outlier, surging 15.20% after committing $25 million to Corintis' chip-cooling technology. The MOVE signals miners' growing desperation to optimize data center efficiency. Meanwhile, Core Scientific (CORZ) eked out a 1.30% gain as VR Advisory Services accumulated 1.2 million shares.

The bloodletting was most severe among top-tier miners. Marathon Digital and Riot Platforms led declines, their woes compounded by Bitcoin's failure to breach $40,000. 'The math no longer works,' lamented one fund manager, noting electricity costs now consume 65-70% of revenue at average facilities.

Dormant Casascius Bitcoin Coins Awaken After 13-Year Slumber

Two physical Bitcoin collectibles from the early 2010s have stirred the crypto market after 13.2 years of dormancy. The first Casascius coin moved 1,000.0028 BTC ($90M), while a second transferred 999.99998110 BTC ($90M) – totaling $180M in reactivated assets. The identities of the holders remain unknown, though motives range from portfolio rebalancing to safeguarding against physical degradation.

These movements follow a broader trend of Casascius redemptions in 2025, including a 100 BTC withdrawal in July and 9.5 BTC in October. Minted by Utah entrepreneur Mike Caldwell in 2011, these gold/silver-plated coins functioned as early cold storage devices. Each contained a private key behind tamper-evident holograms – once broken, the honeycomb-patterned seal becomes irreversible proof of access.

The market watches closely as such large-volume movements from vintage storage solutions often precede strategic allocations. With 8 BTC from smaller Casascius coins also redeemed the same day, the activity suggests coordinated asset management rather than isolated events.