Against the backdrop of a weakening US dollar and rising expectations of Federal Reserve rate cuts, the market is beginning to reassess the medium- to long-term prospects of Bitcoin and cryptocurrencies. Analysts generally believe that 2026 could become a pivotal turning point for the digital asset market.
(Background summary: Investment bank Cantor Fitzgerald: Bitcoin entering a “crypto winter” may continue to face pressure, but institutional players are lighting the way for industry transformation)
(Additional context: Bloomberg strategist Mike McGlone warns: Bitcoin may first drop to $50,000 next year before ultimately crashing to $10,000)

Table of Contents

• Bitcoin enters consolidation, unable to keep pace with precious metals rally
• US dollar experiences largest annual decline in years, rate cuts become market consensus
• Divergence within Federal Reserve, interest rate policy remains uncertain
• Rising political uncertainty, US dollar dominance under scrutiny
• Analysts: Loose monetary environment benefits crypto assets

After experiencing a turbulent and underperforming year, Bitcoin and the overall cryptocurrency market are standing at a new crossroads. According to Forbes, as market expectations for future Fed rate cuts heat up and signs of a weakening dollar emerge, many analysts believe these macro factors could bring a new wave of upward momentum for Bitcoin in 2026.

Bitcoin enters consolidation, unable to keep pace with precious metals rally

Recently, gold and silver prices have continued to rise, but Bitcoin’s performance has been relatively weak, with prices lingering around $90,000 for a long period without a clear breakout. The market generally interprets this as investors still observing the Fed’s policy direction and whether global liquidity conditions are about to undergo a substantial change.

US dollar experiences largest annual decline in years, rate cuts become market consensus

Analysis indicates that the dollar has fallen nearly 10% against a basket of major currencies this year, marking the most dramatic annual decline since 2017. The market believes this trend is closely related to expectations of future rate cuts by the Fed.

In this regard, ING Chief International Economist James Knightley states that compared to other major central banks, the Fed still maintains a relatively dovish stance and remains in a “loose monetary policy” mode. Against this backdrop, the potential for further dollar weakening has become a key focus for investors.

Divergence within Federal Reserve, interest rate policy remains uncertain

The latest Federal Reserve meeting minutes show that even though officials have decided to cut rates, there are still clear disagreements within the Fed about whether to continue adjusting interest rates afterward. Some policymakers believe that after this (December) adjustment, rates may need to remain unchanged for a period to observe economic data.

Meanwhile, according to CME FedWatch tool, investors currently assign over an 80% probability that the Fed will hold steady at the January meeting, but other prediction platforms suggest the possibility of another rate cut before mid-2026 remains high.

Rising political uncertainty, US dollar dominance under scrutiny

In addition to monetary policy itself, US political factors have also become variables in the market. Recently, US President Trump has again pressured the Fed, sparking discussions about the independence of the central bank and its policy direction.

Former US Treasury official and think tank OMFIF President Mark Sobel pointed out that the influence of political factors on the dollar’s international status may be a long-term and slow process, but it is enough to exert pressure on market psychology.

Analysts: Loose monetary environment benefits crypto assets

Several cryptocurrency market participants believe that once the Fed officially enters a rate-cutting cycle, lower funding costs will benefit risk assets, with Bitcoin often seen as a primary beneficiary.

Timot Lamarre, Head of Market Research at crypto custody firm Unchained, stated that a shift to dovish monetary policy means more ample dollar liquidity in the market, and Bitcoin typically reacts first in such an environment.

Owen Lau, Managing Director of Clear Street, also pointed out that rate cuts could become a significant catalyst for the crypto market in 2026, potentially attracting retail investors back and increasing institutional participation in crypto assets.