Bitcoin Set for December Recovery Amid Macroeconomic Forces and Potential Fed Rate Cuts

Bitcoin (BTC) is poised for potential gains in December due to favorable macroeconomic conditions and expectations of an interest rate cut from the Federal Reserve. However, investor sentiment remains cautious, particularly in light of prior hawkish comments from Fed officials.

Key Takeaways

Coinbase Institutional reports that improving liquidity conditions and a high probability of a Federal Reserve interest rate cut could facilitate a market recovery in December.
Market sentiment is currently dominated by fear, with institutional and retail investors hesitant to invest.
Analysts are closely monitoring Federal Reserve Chair Jerome Powell's comments as they may significantly impact Bitcoin’s momentum into 2026.
Speculation surrounds a potential shift in Fed leadership that could lead to a more dovish monetary policy.

BTC poised for December recovery on ‘macro tailwinds,' Fed rate cut: Coinbase

December Recovery Anticipated

According to Coinbase Institutional, the crypto market may see a rally this December spurred by improving liquidity and an overwhelming 92% chance of a Federal Reserve interest rate cut (as of December 4). “We believe crypto is ready for a December recovery as liquidity strengthens and macroeconomic factors come into play,” Coinbase stated in its Friday research report.

In October, the firm predicted sluggishness in the crypto market leading up to a reversal in December, based on its custom global M2 money supply index, which gauges the amount of available fiat currency.

Source: Coinbase Institutional

Despite these positive projections, overall market sentiment remains “driven by fear,” with both institutional and retail investments cautious, leaving the markets stagnant as they await recovery in exchange-traded fund (ETF) inflows.

Fed's Influence on Bitcoin's Future

Looking ahead, market analysts have pointed to the potential for a “Santa rally,” where assets typically see gains around the holiday season, particularly following a Federal Reserve rate cut. According to Nic Puckrin, a crypto analyst and co-founder of Coin Bureau, Bitcoin's potential growth in early 2026 may significantly depend on Federal Reserve Chair Jerome Powell's statements. He remarked, “Investors will carefully analyze Powell’s comments during the press conference for insights into the monetary policy for 2026, with any hawkish tones potentially stifling the rally.”

Previous comments from Powell have contributed to Bitcoin's selling pressure in November, but analysts expect a rebound in December. Chris Kim, co-founder and CEO of Axis, a quantitative trading fund, agrees with this recovery outlook: “In general, we’re leaning toward a recovery since macroeconomic conditions are the key driver at the moment.”

Furthermore, Kim noted growing speculation that Kevin Hassett, the current National Economic Council Director, may be nominated as the next Federal Reserve Chair in early 2026. Such a move could introduce a more “dovish” policy approach, potentially benefiting the crypto market.

Looking Ahead

As December unfolds, the crypto community is watching both macroeconomic signs and the Federal Reserve's stance closely, preparing for possible shifts that could significantly shape Bitcoin’s path in the upcoming months.