The U.S. Federal Reserve delivered a widely expected 25 bps rate cut on Wednesday, lowering the target range to 3.50%–3.75%, but uncertain forward guidance from Chair Jerome Powell dampened expectations for a near-term Bitcoin breakout.Analysts say Powell’s remarks — neither fully hawkish nor dovish — signal that the meaningful portion of the easing cycle may not begin until 2026, leaving crypto markets without a strong macro catalyst in the short term.Powell Warns of “No Risk-Free Path,” Signals Caution AheadAt the December FOMC meeting, Powell emphasized the complexity of the current economic landscape:“In the near term, risks to inflation are tilted to the upside and risks to employment to the downside — a challenging situation. There is no risk-free path for policy.”While the comments were softer than some feared, they lacked the clarity markets hoped for. According to Coin Bureau founder Nic Puckrin, Powell’s communication suggests only one rate cut may materialize in 2026 under his leadership.Puckrin noted that liquidity, not rates, will be the key macro driver:“Attention will turn to liquidity and the Fed’s balance sheet policy in early 2026. Despite the Treasury bill purchase announced today, quantitative easing isn’t coming until things start breaking — and that always means more volatility and potential pain.”Market Data Shows Traders Skeptical of Further Cuts Before 2026Bitcoin typically benefits from lower rates and increased liquidity, but futures traders remain cautious.Only 24.4% of the market currently expects another rate cut at the January 2026 FOMC meeting, according to CME FedWatch data.This uncertainty follows months of missing economic data due to the U.S. government shutdown — a gap Powell acknowledged during the press conference.Meanwhile, BTC traded around $90,375 following the announcement, holding within its recent range but lacking directional conviction.Inside the Fed’s Assessment: Growth Resilient, Housing Weak, Inflation StubbornPowell said consumer spending and business investment remain “solid,” while labor markets continue to show low layoffs and stable hiring.However, he emphasized that inflation remains elevated, and the housing sector shows persistent weakness, limiting the Fed’s room for aggressive easing.The lack of recent public economic reports has forced the Fed to rely heavily on market-based indicators — a point Powell admitted may complicate policymaking.Politics Loom Over Monetary Policy: Trump Signals Incoming Fed Leadership ShiftWith Powell’s term set to expire in May 2026, President Donald Trump has been openly weighing a replacement.Kevin Hassett, director of the National Economic Council and a former adviser to Coinbase’s Academic and Regulatory Advisory Council, is widely viewed as the frontrunner.Trump has already signaled that the next chair will be expected to accelerate rate cuts, adding political pressure to an already delicate macro environment.Bitcoin Rally Delayed, Not CanceledThe Fed’s December decision reinforces a familiar short-term setup:Rates are lower, but not enough to trigger a risk-asset surge.Forward guidance is mixed, limiting near-term conviction.Liquidity injections have begun, but QE remains off the table until conditions worsen.BTC derivatives show skepticism, with limited expectations of a breakout before 2026.In other words, Bitcoin may remain range-bound until clearer signals emerge from the Fed — or until the next phase of easing begins.
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