Bitcoin News Today: Bitcoin Surges Past $86,900 as Fed Easing Hopes Fuel Market Optimism

Bitcoin prices surged above $87,000 on Monday as Federal Reserve Chair Jerome Powell avoided comments on economic policy during a speech at Stanford University. The move came amid growing expectations for a 25 basis point rate cut at the Fed's upcoming December meeting, with the CME FedWatch Tool now showing an 87% probability of the cut. Traders and investors are closely monitoring the central bank's next move, with market sentiment leaning toward optimism as economic data points to weakening conditions.

Powell confirmed he would not address monetary policy in his remarks, a decision in line with the Fed's blackout period ahead of its policy meeting. His comments were delivered during an event honoring former U.S. Secretary of State George Shultz, where he focused on his candidacy and the legacy of the late statesman according to reports. The Fed's silence on policy left traders interpreting his remarks as a positive signal, reinforcing expectations that the central bank may soon ease monetary conditions.

The Fed's decision to end its quantitative tightening (QT) program on the same day Powell spoke added to the optimism. The move signals a potential shift toward quantitative easing (QE) and increased liquidity in the financial system. These developments, combined with recent economic data showing a contraction in the U.S. manufacturing sector, have heightened speculation around a rate cut. The ISM Manufacturing PMI for November fell to 48.2, the ninth consecutive month of contraction and a key indicator of slowing economic activity according to data.

How Markets Reacted

Bitcoin's price climbed more than 2% in the past 24 hours, reaching a high of $87,325 before stabilizing near $86,970. The price rebound followed Powell's speech and a broader "buy-the-dip" sentiment among traders. Despite the optimism, derivatives data from CoinGlass showed mixed positioning in the market. While total open interest in Bitcoin futures rose slightly, trading volumes on exchanges like Binance and Bybit declined.

The crypto market remains cautious, with altcoins under pressure and investors shifting capital to stablecoins as they await clarity on the Fed's decision. The broader market is still evaluating how macroeconomic conditions will impact liquidity and risk assets in the coming months. Traders are closely watching the December 10 FOMC meeting for confirmation on the central bank's next steps.

What This Means for Investors

The anticipation of a Fed rate cut has become a major driver of Bitcoin's performance. A 25 basis point cut would likely boost liquidity and reduce borrowing costs, which historically have supported Bitcoin and other risk assets. The market is also reacting to speculation about a potential replacement for Powell as Fed Chair. White House economic adviser Kevin Hassett, who has previously supported deeper rate cuts, is being considered as a possible successor, adding to expectations of policy easing.

Bitcoin ETFs ended a difficult November with a late inflow of $70 million, signaling a shift in investor sentiment. Despite a month of outflows totaling $4.3 billion, the final days saw renewed buying interest, suggesting that investors are cautiously optimistic about the asset's prospects. The resilience of Bitcoin's price amid outflows also highlights the strength of underlying demand.

The December FOMC meeting, scheduled for December 9 and 10, is expected to be a pivotal moment for both the Fed and the crypto market. The meeting will provide clarity on the central bank's stance and guide expectations for 2026. If the Fed signals a more aggressive rate-cutting path, it could further support Bitcoin and other cryptocurrencies.

Risks to the Outlook

Despite the positive momentum, risks remain for Bitcoin and the broader crypto market. The Fed's decision is being made without the latest inflation data, which is not expected until December 18. This creates uncertainty, as the central bank is setting the tone for monetary policy without the most up-to-date economic information. A hawkish stance from Powell could quickly shift market conditions and increase volatility.

Seasonal factors also pose a challenge. December typically sees thinner liquidity in financial markets, with hedge funds and institutional investors locking in annual performance and reducing exposure ahead of the holidays. In a thin market, even moderate flows can trigger significant price swings according to analysis. If the Fed delays a rate cut or adopts a more cautious approach, the market may experience renewed selling pressure.

Bitcoin ETFs and their flow dynamics are another key factor. If net outflows resume, especially within the $50 million to $150 million range, it could recreate the conditions seen in November. In a market with reduced liquidity, this could amplify volatility and negatively impact Bitcoin's price according to market data.

As the FOMC meeting approaches, investors are watching for signals that could confirm or adjust expectations. The Fed's decision will not only shape the immediate direction of Bitcoin but also influence the broader economic and financial landscape in the coming months.