On December 2nd, Bitcoin recorded a price surge above $87,000, amidst optimistic predictions for January 2026. Concurrently, the US Federal Reserve announced the cessation of Quantitative Tightening (QT), injecting $13.5 billion into the banking system. The likelihood of an upcoming interest rate cut this month is also surging, further fueling Bitcoin's price recovery, among other contributing factors.
Bitcoin Price Action
At the time of writing, BTC is trading in positive territory, above $86,000, having surpassed the $87,000 level earlier in the day.
The BTC price experienced a rebound at current levels after dropping below $84,000 on December 1st, amidst prevailing optimistic predictions.
The digital asset is poised to maintain an upward trajectory due to several key reasons, including sustained institutional interest, the emergence of clearer regulations and pro-crypto legislation, and the Federal Reserve's latest policy adjustments.
Bitcoin's 2026 All-Time High Predictions
The latest price predictions for Bitcoin suggest the digital asset could reach a new all-time high in January 2026.
Tom Lee, chairman of BitMine, has revised his earlier forecast of Bitcoin reaching $250,000 by the end of 2025. In a recent CNBC interview, Lee expressed his belief that Bitcoin could achieve a new all-time high by the end of January 2026.
Additionally, Grayscale Research, in a report published on December 1st, indicated that the BTC price is likely to set new highs next year. The report highlighted that the traditional four-year cycle thesis might not hold true for this cycle due to several factors:
- •Unlike previous cycles, there has been no parabolic price increase during the current bull market that would suggest an overshoot.
- •Bitcoin's market structure has evolved, with new capital primarily entering through Exchange-Traded Products (ETPs) and Digital Asset Trusts (DATs), rather than traditional retail exchanges.
- •The broader macroeconomic environment remains favorable for Bitcoin and the cryptocurrency market.
Potential Price Triggers for BTC
Several factors suggest that Bitcoin will resume its rally and reach new all-time highs in the near future, despite recent industry-related apprehension.
Debunking Supposed Reasons for Crypto Selling
Jeff Dorman, Chief Investment Officer at Arca, stated on December 1st via X (formerly Twitter) that Wall Street is observing the same bullish indicators as he is. He noted that the "supposed reasons" for the crypto sell-off are easily debunked or have been reversed. These include:
- •MicroStrategy (MSTR) is not selling its Bitcoin holdings.
- •Tether (USDT) is not insolvent.
- •Digital Asset Trusts (DATs) are not selling.
- •Nvidia (NVDA) is not experiencing significant operational issues.
- •The Federal Reserve is not adopting a hawkish monetary policy stance.
Conversely, Dorman outlined multiple reasons for optimism, including:
- •The US Federal Reserve has announced the end of Quantitative Tightening.
- •Equity, credit, and gold/silver markets are consistently reaching new all-time highs each month.
- •Demand related to Artificial Intelligence (AI) remains robust.
- •Consumer spending is strong.
- •The Federal Reserve is widely expected to cut interest rates this month, with the probability of such a move exceeding 87%.
Diving into one of the strangest crypto sell-offs ever.
Wall Street is seeing all of the same bullish signs that I’m seeing — equity, credit and gold/silver markets are launching to ATHs every month because the Fed is cutting rates, QT is ending, consumer spending is strong,…
— Jeff Dorman (@jdorman81) December 1, 2025
Continued Institutional Interest and Increased BTC Holdings
Institutional interest in Bitcoin remains strong. Despite recent rumors, Strategy (presumably referring to MicroStrategy's Bitcoin acquisition strategy) is not divesting its holdings. On December 1st, Michael Saylor announced new Bitcoin acquisitions, bringing Strategy's total holdings to 650,000 BTC, valued at over $56 billion at current prices.
Strategy has acquired 130 BTC for ~$11.7 million at ~$89,960 per bitcoin. As of 11/30/2025, we hodl 650,000 $BTC acquired for ~$48.38 billion at ~$74,436 per bitcoin. $MSTR$STRC$STRK$STRF$STRD$STREhttps://t.co/UkWX7PRHms
— Michael Saylor (@saylor) December 1, 2025
US Federal Reserve's Latest Announcements
The Federal Reserve announced the end of Quantitative Tightening on December 1st, stabilizing its balance sheet at $6.57 trillion. This signifies that the Fed will no longer withdraw money from the financial system, thereby creating significant opportunities for the cryptocurrency market.
It is important to note that since June 2022, the Federal Reserve and other central banks have collectively withdrawn approximately $2.4 trillion from global markets. This represents the largest monetary drain in history, leading to higher interest rates and increased national debts.
Furthermore, the Fed injected $13.5 billion into the US Banking System through overnight repurchase agreements (repos). This marks the second-largest liquidity injection since the COVID-19 pandemic and surpasses the peak of the Dot Com Bubble, as highlighted by Barchart.
Crisis in the Traditional Financial System
The Federal Reserve's recent actions signal an ongoing crisis within the traditional financial system. The repo market facilitates short-term dollar funding for financial institutions, where banks borrow cash overnight using US Treasuries as collateral.
An increase in repo demand occurs when banks require liquidity to stabilize their balance sheets. Such spikes can indicate tightening credit conditions or collateral pressures across financial institutions.
Researcher Rob Cunningham, as cited by Trading View, pointed out that the US financial system is currently reliant on emergency tools originally intended for rare crises. These indicators include:
- •Banks possess less cash, with elevated unrealized losses.
- •Companies are facing greater difficulty in obtaining loans.
- •The government is incurring higher interest payments on its debt.
- •Short-term lending is becoming riskier.
The Rise of a New Financial System
As the traditional financial system weakens, a new paradigm is emerging, with Bitcoin and Distributed Ledger Technology (DLT) at its core. The introduction of clearer regulations in the US through initiatives like the GENIUS Act and the CLARITY Act will establish well-defined rules and enhance transparency within the ecosystem.
Moreover, tokenized Real-World Assets (RWAs) and new digital trade systems are empowering countries to transfer value more efficiently, at a lower cost, and without the need for intermediaries. BlackRock recently emphasized that tokenization is shaping the next evolution of global markets by:
- •Modernizing market infrastructure.
- •Enhancing operational efficiency.
- •Increasing transparency and accessibility by bridging traditional and digital finance.
The traditional financial system began to falter in 1971 when the US ended the dollar's convertibility to gold. Bitcoin, born in the aftermath of a global financial crisis, offers an alternative solution for money, grounded in truth and incorruptibility.