Bitcoin (BTC-USD) rose above $92,000 on Tuesday, but strategists turned cautious over the prospects of a year-end cryptocurrency rally amid rising expectations of a rate cut by the Federal Reserve.
Markets widely expect the central bank to deliver a 25 basis point rate cut at the end of its two-day policy meeting on Wednesday. But both CME FedWatch and Polymarket show growing investor bets on a pause in January. Investors will closely scrutinize Fed Chair Jerome Powell’s remarks on Wednesday afternoon for clues about the path policymakers will take as they try to balance containing inflation with a cooling labor market.
“If Powell really delivers a hawkish speech, the likelihood of a Santa Claus rally for Bitcoin decreases,” said Nic Puckrin, investment analyst and co-founder of Coin Bureau in a note on Tuesday.
“Momentum hasn’t been on Bitcoin’s side lately, despite new purchases from Michael Saylor’s Strategy (MSTR), so we may well end 2025 below $100,000,” he added.
However, Puckrin expects cryptocurrencies to rebound once President Trump announces his pick to replace Powell when his term ends in May. The leading candidate is Kevin Hassett, who is considered a supporter of the industry.
“With ultra-moderate Kevin Hassett the favorite to replace Powell next year, markets could very quickly go from depression to euphoria in 2026,” Puckrin said.
Bitcoin has struggled to recover in recent weeks after falling from its October high of around $126,000.
“As BTC trades near the upper end of its recent range of $81,000 to $94,000, we remain cautious about looking for breaks here,” Compass Point analyst Ed Engel said in a note Tuesday morning.
Analysts noted that buyers who purchased in the last six months did so at a cost of around $103,000 per token.
“When BTC trades below this cost base, investors are more likely to ‘sell the gain’ than ‘buy the dip,’” Engel said.
Bitcoin has fallen 2% so far this year, setting it up for its worst annual performance since the 2022 crypto winter wiped out more than 64% of its value.
The token is also moving sharply away from stocks for the first time since 2014, as the S&P 500 (^GSPC) advances with a 16% gain.
Inés Ferré is a senior business reporter at Yahoo Finance. Follow her on X in @ines_ferre.
Click here for the latest cryptocurrency news, prices, updates and more
Read the latest financial and business news from Yahoo Finance