Bitcoin Briefly Surpasses $106K Record Before Pulling Back on Hawkish Fed Policy Concerns.

Bitcoin Hits Record $106K Before Slipping as Markets Brace for Fed’s Hawkish Rate Cut Stance

Bitcoin (BTC) briefly soared past $106,000 during early Asian trading hours, marking a new all-time high, before retreating to $104,500. The pullback comes amid expectations that the U.S. Federal Reserve (Fed) will deliver a “hawkish rate cut” this week, dampening hopes for aggressive monetary easing in 2024.

The Fed is widely forecasted to trim interest rates by 25 basis points to a 4.25%-4.5% range, marking its latest step in a gradual policy shift. However, concerns linger that Fed Chair Jerome Powell and the central bank’s dot plot—projecting future rate moves—will signal a slower-than-expected pace of cuts next year, applying pressure to risk assets, including Bitcoin.

“The Fed may cut rates but could temper market optimism by signaling fewer reductions ahead,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. “Given the economy’s resilience and uneven inflation trends, policymakers have room to remain cautious.”

The Fed’s rate decision, along with updated economic projections and Powell’s post-meeting press conference, is scheduled for Dec. 18. Analysts caution that any signals of reduced easing could push Treasury yields and the U.S. dollar higher, creating headwinds for Bitcoin’s continued rally.

Despite short-term risks, Bitcoin’s bull case remains intact. Seasonality trends favor strong performance in December, while global liquidity conditions are set to improve as central banks, including China, lean toward easing policies. Pro-crypto sentiment under President-elect Trump’s administration also adds a tailwind for digital assets.

“Global monetary easing remains a core narrative driving Bitcoin higher,” noted LondonCryptoClub analysts. “Even if the Fed adopts a cautious tone, rising global liquidity and institutional interest in BTC will likely provide continued support.”

Investors will also be closely watching this week’s core Personal Consumption Expenditures (PCE) data, the Fed’s preferred inflation measure, for further clues on inflation’s trajectory. A hotter-than-expected reading could reinforce the Fed’s cautious stance, while cooler data might fuel optimism for faster easing.

For now, Bitcoin’s record-setting run reflects investor confidence in its long-term outlook, even as markets navigate the uncertain path of U.S. monetary policy.