Bitcoin's potential rally in December could be fueled by macroeconomic factors, such as the Federal Reserve's upcoming interest rate decision. However, any hawkish comments from central bank officials could dampen investor sentiment. According to a report by Coinbase Institutional, improved liquidity conditions and the increasing likelihood of a Federal Reserve interest rate cut may trigger a recovery in the crypto market as the year ends. Coinbase noted, "We believe crypto is set for a December recovery as liquidity conditions improve, the probability of a Fed rate cut rises to 92% by December 4, and macroeconomic tailwinds strengthen."
In October, Coinbase had forecasted a period of "weakness" in the crypto market before a predicted "December reversal," based on their proprietary global M2 money supply index, which tracks the total supply of fiat currency. Nonetheless, market sentiment continues to be overshadowed by fear, with both institutional and retail investors hesitant to engage, leaving the market in a state of uncertainty pending a recovery in exchange-traded fund (ETF) inflows, as per Coinbase's insights.
Analysts have also pointed to the possibility of a "Santa rally" following the Federal Reserve's rate cut—a market trend where assets experience short-term gains around Christmas. Bitcoin's (BTC) performance in the early months of 2026 might be significantly influenced by statements from Federal Reserve Chair Jerome Powell, according to Nic Puckrin, a crypto analyst and co-founder of the Coin Bureau educational platform. He mentioned to Cointelegraph, "If the Fed cuts rates on December 10th and ends quantitative tightening, there’s little preventing a Santa rally for Bitcoin, unless a major geopolitical crisis occurs."
However, Puckrin emphasized that investors will carefully analyze Jerome Powell's comments during the press conference to anticipate the monetary policy outlook for 2026, and any hawkish tone could stall the rally. Other analysts have linked Bitcoin's price pressure in November to Powell's earlier hawkish remarks but anticipate a recovery in December. Chris Kim, co-founder and CEO of Axis, an onchain quantitative trading fund managing $100 million, expressed optimism about a recovery, stating, "The primary driver currently is macroeconomic conditions."
Kim further explained that from a technical standpoint, the market has already revisited the ~$80k level and the 100-week average, and there have been positive developments such as Vanguard allowing ETF trading. Additionally, speculation about National Economic Council Director Kevin Hassett possibly becoming the next Federal Reserve Chair in early 2026 is seen as another factor that could positively impact crypto assets, as his appointment is expected to bring a "notably more dovish" policy approach.