Interest Rate Decision and Market Implications
The Federal Reserve announced a 25 basis point interest rate cut on Wednesday, setting the target range between 3.5% and 3.75%. However, Federal Reserve Chair Jerome Powell's subsequent remarks have led analysts to believe that a significant Bitcoin price rally may be delayed until the rate-cutting cycle resumes in 2026.
Powell stated during the Federal Reserve Open Committee (FOMC) meeting, "In the near term, risks to inflation are tilted to the upside and risks to employment to the downside, a challenging situation. There is no risk-free path for policy."
While these comments were not as "hawkish" as some analysts had anticipated, the Federal Reserve is now projected to implement only one rate cut in 2026 under Powell's tenure, according to market analyst and Coinbureau founder Nic Puckrin. He elaborated on the outlook:
"Attention will turn to liquidity and the Fed’s balance sheet policy in early 2026. However, despite the Treasury bill purchase announced today, quantitative easing isn’t coming until things start breaking, and that always means more volatility and potential pain."
Historically, lower interest rates tend to fuel risk-on assets, including Bitcoin (BTC). However, current data from the CME Group indicates that only 24.4% of traders expect a rate cut at the upcoming FOMC meeting in January 2026.
Powell's Economic Assessment and Government Shutdown Impact
Powell provided an assessment of the current economic landscape, noting that consumer spending and business investment remain "solid" and that layoff and hiring rates are low. Despite these positive indicators, he acknowledged that inflation is still "somewhat elevated" above the Federal Reserve's 2% target, and the housing sector continues to be "weak."
The Federal Reserve based its conclusions on available market data. However, Powell also pointed out that the ongoing US government shutdown has resulted in a lack of crucial public economic reports, impacting the comprehensiveness of the data used.
Presidential Influence and Future Fed Leadership
In parallel to the Federal Reserve's decisions, US President Donald Trump has been actively considering potential replacements for Powell. National Economic Council director Kevin Hassett is widely reported to be the leading candidate for the position. Hassett has previously served as an adviser on Coinbase’s Academic and Regulatory Advisory Council.
Trump has publicly expressed his desire for the next Fed chair to implement rate cuts. Powell's current term as Federal Reserve Chair is scheduled to conclude in May 2026.