Bitcoin targets $100,000 as a 74.5% probability of a 25bps rate cut looms

Bitcoin is drawing significant attention as markets await a potential move from the U.S. Federal Reserve (Fed), with growing expectations that a rate cut could drive the value of the cryptocurrency higher. The CME FedWatch Tool currently shows a 74.5% probability of a 0.25% rate cut at the Fed’s upcoming meeting on December 18. This follows previous cuts of 50 basis points (bps) in September and 25 bps in November, which would lower the Fed’s target federal funds rate to a range of 4.25% to 4.5%. A move like this, seen as a dovish (loose monetary policy) signal, could potentially spark a fresh momentum for Bitcoin and other altcoins.

The Fed’s anticipated action follows recent inflation data suggesting that price levels are stabilizing, with Federal Reserve Governor Christopher Waller expressing support for a rate cut due to downward inflation trends. Additionally, other Fed officials, including Raphael Bostic, have hinted that the central bank may be open to further rate cuts, raising market expectations for such a decision. If the rate cut materializes, it would reduce borrowing costs and increase liquidity—conditions that historically benefit assets like Bitcoin, viewed as a hedge against inflation.

Bitcoin has already seen significant gains, reaching a high of $99,655 in November, nearly touching the $100,000 mark before encountering a pullback driven by profit-taking from long-term holders. At press time, Bitcoin is trading at $96,812, up 1.52% in the past 24 hours. However, it has continued to consolidate between $93,000 and $96,000, with many market participants awaiting a major catalyst to push the price above the key $100,000 level.

Maksym Sakharov, co-founder of WeFi, suggests that the dovish Fed move could provide the necessary momentum for Bitcoin to break through the $100,000 barrier. He notes that rate cuts typically boost liquidity, which could encourage investors to turn to Bitcoin as a hedge against inflation. Additionally, the recent Bitcoin halving event, which reduces the supply of new coins, combined with increased accumulation from institutional investors, could create upward pressure on Bitcoin’s price.

Beyond macroeconomic factors, market sentiment is also being driven by optimism surrounding U.S. President-elect Donald Trump’s pro-crypto stance. Trump has expressed support for cryptocurrencies in the past, and this sentiment is helping fuel bullish momentum in the Bitcoin market. Sakharov believes that the combination of the expected rate cuts and ongoing institutional accumulation could propel Bitcoin above $100,000 before the end of the year.

However, despite these supporting factors, the market is also closely monitoring other economic indicators, such as employment data and holiday sales trends, as they will play a crucial role in influencing the Fed’s decision at the upcoming meeting. A surprise rise in inflation could temper expectations for a rate cut, which could dampen Bitcoin’s bullish outlook in the near term.