Analyzing Bitcoin’s 12% Price Surge Since December 1 – What’s Behind It?

Bitcoin has experienced a significant price increase of 12.6% since December 1, largely influenced by easing inflation trends and changes in Federal Reserve policies. As the market digests these developments, traders are left to speculate on future movements amidst shifting liquidity and economic indicators.

Key Takeaways

Bitcoin’s price jumped by approximately 12.6% since December 1.
U.S. inflation appears to be cooling, with a current rate of 2.45% YoY from Truflation data.
The Federal Reserve’s termination of Quantitative Tightening (QT) on December 1 has altered liquidity dynamics.
Market expectations are leaning towards a 25 basis point rate cut, with an 87.2% probability noted by the CME FedWatch tool.

Analyzing Bitcoin's 12% Price Surge Since December 1 - What’s Behind It?

U.S. Inflation Trends and the Fed's Impact

The latest Truflation data suggests that inflation in the United States may be easing again, showing a year-over-year rate of 2.45% ahead of the upcoming Federal Open Market Committee (FOMC) meeting. This contrasts with the official Consumer Price Index (CPI), which hovers around 3%. Such figures indicate an observable trend of cooling inflation just days before the FOMC's decision.

This timing is particularly noteworthy as the Federal Reserve concluded its Quantitative Tightening (QT) strategy on December 1, 2025.

Source: Truflation US Inflation Index

Changes in Liquidity Framework

The Federal Reserve's balance sheet provides context for these events. In 2022, total assets reached a peak of nearly $8.97 trillion. As of December 3, the most recent balance reflects assets of around $6.54 trillion, indicating about $2.43 trillion in cumulative reductions since the commencement of QT2.

In November alone, approximately $37 billion were drawn off, coinciding with a complete zer0 usage of the Standing Repo Facility.

Source: X/Wolf Richter

The absence of activity in the Standing Repo Facility might signal a period of stabilization in the money markets. It could also suggest that the Fed is able to pause the shrinking of its balance sheet without causing market disruptions. Although QT officially concluded on December 1, the impact of Quantitative Easing (QE) has yet to be observed.

Bitcoin's Price Movement

Analyzing Bitcoin on a 4-hour chart, the cryptocurrency surged by about 12.6% since hitting a low after QT, moving from $83,500 to the $93,000-$94,000 range. Bulls have managed to maintain support around the $90,900 level, but seller activity has contained upward momentum at recent peak levels.

Source: TradingView

Currently, Bitcoin appears to be trading within a narrow range that reflects a hesitance driven by macroeconomic conditions rather than a lack of technical strength.

Rate-Cut Expectations and Future Outlook

As indicated by the CME FedWatch tool, the likelihood of a 25 basis point interest rate cut has climbed significantly to 87.2%. In contrast, only 12.8% of traders anticipate that the Fed will maintain current interest rates.

If the anticipated rate cut occurs alongside continued cooling inflation, Bitcoin could enjoy favorable pricing conditions in the first and second quarters of 2026. Conversely, if the Fed decides against a cut, the recent 12% increase in Bitcoin’s price may lead to a prolonged period of price consolidation.

Conclusion