Bitcoin Rangebound Through 2025, Fed Cuts Key to 2026 Rally

The crypto market enters the final weeks of 2025 in a fragile state, experts told Decrypt. Bitcoin’s sudden 7% slide on the first day of December entrenched a fearful mood, extending a roughly 31% correction from its October 6 peak of $126,080. According to Derek Lim, head of research at crypto market-making firm Caladan, Bitcoin is likely to remain range-bound with elevated volatility, consolidating between $83,000 and $95,000. This cautious outlook is echoed by Tim Sun, a senior researcher at HashKey Group, who noted that liquidity conditions and sentiment remain weak, making a strong one-way uptrend before year-end unlikely.

The current market dynamic is one where negative news—such as speculation about Tether’s (USDT) stability and concerns over MicroStrategy’s (MSTR) financial position—weighs heavily, while positive developments fail to lift prices. This has prompted a pervasive risk-off shift, evidenced by gold’s rise amid the tumble in stocks and crypto. “For Bitcoin to regain a clear upward trajectory, the macro environment would need to improve more than people currently expect,” Sun told Decrypt. The immediate focus, therefore, is not on explosive growth but on “working on forming a bottom” through consolidation.

Despite the sharp correction, analysts are careful to differentiate the current pullback from the onset of a true bear market. Tim Sun clarified the distinction: “A true bear market usually involves long-term money leaving the space, narratives breaking down, and institutions pulling back in a big way.” The current climate, in contrast, is defined by lower risk appetite and tight liquidity rather than a wholesale institutional exodus. Sun further noted the absence of the speculative excess seen at previous cycle peaks, stating, “We’re not seeing widespread euphoria.”

This supports the prevailing view that Bitcoin is experiencing a bull-market correction. The thesis holds as long as expectations for Federal Reserve easing in 2026 remain intact. “As long as expectations for a looser Fed cycle in 2026 don’t get completely derailed… this phase is more likely a bottom-forming consolidation—not a new long-term bear market,” Sun explained. However, Derek Lim of Caladan issued a critical warning: a decisive break below the $75,000 support level would invalidate this consolidation narrative and potentially open the door to a much deeper downturn.

Looking beyond the immediate rangebound trading, the primary catalyst for a renewed Bitcoin rally is unequivocally the Federal Reserve’s monetary policy path. Analysts point to the Fed’s guidance following an anticipated December rate cut, followed by two to three more cuts through mid-2026, as the necessary fuel for a sustained uptrend. While the Fed recently ended its quantitative tightening (QT) program—removing a significant structural headwind—the positive effects on market flows are expected to materialize with a lag.

Derek Lim drew a parallel to the 2019 market setup, where risk assets began a significant rally roughly six to twelve months after the Fed concluded its last QT cycle. This historical precedent suggests that the conclusion of QT, while positive, may not provide an immediate jolt to crypto markets. For sustained tailwinds, the market requires the combination of a clear Fed cutting cycle, balance sheet stability post-QT, and continued institutional adoption.

With these catalysts aligned, Lim forecasts a more bullish mid-to-long-term outlook, with Bitcoin potentially trading in a range of $110,000 to $135,000. The journey to those levels, however, is contingent on navigating the current period of elevated volatility and fragile sentiment, with all eyes fixed on the Federal Reserve’s moves as the definitive guide for 2026’s market direction.