Fed Rate Cut Sparks Bitcoin $100K Speculation Amid Market Optimism

The Federal Reserve’s latest move, reducing the interest rate range to 3.5% to 3.75%, is being interpreted by some market observers as a significant tailwind for Bitcoin. Analyst Michael van de Poppe characterized the cut as a “great move” for the cryptocurrency, suggesting it could unlock substantial bullish momentum. His analysis hinges on Bitcoin’s ability to maintain a critical support zone between $91,500 and $92,000. According to van de Poppe, a sustained breakout above $92,000 could be the technical signal needed to pave a pathway for Bitcoin to approach the coveted $100,000 mark.

This optimism extends beyond technical analysis. The rate cut is seen as part of a broader shift in monetary policy that could increase market liquidity. As noted by market expert Ash Crypto, this marks the third rate cut in the current cycle, a development that historically benefits risk assets by encouraging capital flow away from traditional safe havens. For Bitcoin, often viewed as a digital risk asset or hedge against monetary debasement, increased liquidity is a fundamental positive, potentially amplifying the effects of the Fed’s decision beyond what was observed after the October cut.

However, the bullish outlook is tempered by a cautionary historical pattern highlighted by Ash Crypto. Data shows that each of the last four instances where the Fed implemented a 25 basis point cut was followed by a 5% to 10% decline in the Bitcoin price shortly thereafter. This pattern serves as a reminder that immediate market reactions to Fed policy can be counterintuitive and driven by profit-taking or shifting risk assessments in the short term.

Despite this history, experts argue the current market setup diverges from past scenarios. A key differentiator is the conclusion of the Fed’s quantitative tightening (QT) program after three years. This marks a pivotal shift from draining liquidity from the financial system to a neutral or potentially additive stance. Furthermore, Ash Crypto pointed to the potential for Federal Reserve Chair Jerome Powell to hint at future quantitative easing (QE) in upcoming remarks. Any suggestion of a return to QE—a policy of large-scale asset purchases—would represent a powerful bullish signal, likely spurring a significant rally across risk assets, including Bitcoin, by dramatically increasing the money supply.

Adding a layer of political context to the monetary policy discussion is Kevin Hassett, a White House economic adviser and reported leading candidate to succeed Jerome Powell as Fed chair. In comments to the Wall Street Journal CEO Council, Hassett, who is President Donald Trump’s preferred choice for the role, stated there is “plenty of room” for additional interest rate cuts if economic data justifies them. “If the data suggests that we could do it, then — like right now, I think there’s plenty of room to do it,” he remarked.

Hassett has previously been critical of Chair Powell for being “too late” in lowering rates, signaling a more dovish stance that aligns with the current administration’s preferences. His comments reinforce a forward-looking narrative of a potentially more accommodative Federal Reserve, whether under Powell’s remaining tenure or a future Hassett-led board. This prospect of continued or even accelerated rate cuts sustains the underlying thesis that ample liquidity will remain a feature of the market environment, a condition historically favorable for the growth of the cryptocurrency sector.