Bitcoin Dips Following Fed's 25bps Rate Cut: Is BTC's 2026 Rally in Jeopardy?

The Federal Reserve's recent decision to cut interest rates by 25 basis points has generated mixed reactions in the cryptocurrency market. While some see this as an opportunity for liquidity, Bitcoin's (BTC) price has dipped as investors remain cautious about potential volatility and long-term risks.

Key Takeaways

The Federal Reserve cut rates by 25 basis points to 3.50–3.75% on December 10, marking the third cut of 2025.
The Fed's plan to purchase $40 billion in U.S. T-bills over the next month aims to inject liquidity into the financial system.
Bitcoin has reacted to these moves with a 2.14% dip, falling below $90k.
Historical trends suggest Bitcoin often pulls back after Federal Open Market Committee (FOMC) meetings, raising concerns about its 2026 rally.
A recent report points to weak buying interest around $90k, hinting at a supply-skewed market that could pressure BTC further.

Bitcoin: 25bps cut doesn’t clear the clouds for BTC’s Q1 2026 bull run

Market Response to Fed's Rate Cut

The cryptocurrency market is reacting cautiously to the Federal Reserve's recent rate cut of 25 basis points (bps) to a range of 3.50% to 3.75%. This reduction, which took place on December 10, is the third cut this year, leading traders to anticipate a potential influx of liquidity that could favor Bitcoin [BTC].

In addition to the rate cut, the Fed announced plans to buy $40 billion in U.S. T-bills over the next 30 days. This strategy aims to inject additional short-term liquidity into the banking sector, signaling that the U.S. economy may soon see a new wave of capital.

Bitcoin

Despite these moves, Bitcoin has experienced a 2.14% decline, dropping below the $90,000 mark. This decline raises questions about the long-term sustainability of BTC's momentum, especially as the market begins to reflect concerns over potential pauses in rate cuts moving into 2026.

Volatility Challenges Bitcoin’s Future Rally

Investors seem to be bracing for Bitcoin's volatility. Ahead of the Federal Open Market Committee (FOMC) meeting, numerous stakeholders—including mining firms and major institutional investors like BlackRock—offloaded millions of dollars in BTC. With inflation remaining high and mixed signals from the Fed regarding future rate cuts, many investors are exercising caution.

This cautious approach is understandable. Bitcoin has shown a tendency to retreat after the last four FOMC meetings, including a significant nearly 30% decline to $80,000 following the October meeting, marking its first major crash of 2025.

BTC

Given these circumstances, the pressing question arises: Are we about to witness a repetition of these historical patterns? A recent report from Glassnode reveals weak buying activity around the $90k level, which adds to the prevailing cautious sentiment. Combined with aggressive selling from savvy investors, Bitcoin is clearly experiencing a supply-skewed environment that may lead to further downward pressure.

Looking Ahead

The path for Bitcoin as it attempts to establish a base for a potential Q1 2026 rally remains uncertain. With ongoing investor uncertainty, macroeconomic volatility, and a weak fear-of-missing-out (FOMO) sentiment, there is a real possibility that Bitcoin may replicate its post-FOMC downturn, leading to tests of critical support levels.

Conclusion

The market is in a delicate balance as various factors influence Bitcoin's future trajectory. While new liquidity measures from the Fed might offer short-term relief, the cautious stance of investors combined with historical trends suggests that Bitcoin's rally could face significant challenges in the coming months.