Key takeaways:
Bitcoin derivatives and cautious interest rate expectations keep sentiment restrained, yet improving liquidity conditions bolster upside potential.
Regulatory easing and MSCI’s review of BTC-heavy firms could lift risk appetite, supporting a more constructive medium-term outlook for Bitcoin.
Bitcoin (BTC) has been pinned below $92,000 since Thursday and is down 22% in the last 30 days, but the situation could change soon. Bulls expect multiple governments to expand their money supply to support their economies and rising fiscal deficits, while bears often cite softer labor indicators and mounting concerns over artificial intelligence investment trends.
Both views may hold merit, and the recent short-term weakness could ultimately provide the foundation for a more durable Bitcoin rally. Four catalysts will help determine how quickly the price can retest the $112,000 level last seen four weeks ago.
The iShares TIPS Bond ETF tracking US Treasury Inflation-Protected Securities resumed its upward trajectory after retesting support at 110.50 on Thursday. The ETF typically advances when investors anticipate higher inflation, a backdrop that tends to favor Bitcoin as traders seek alternative hedges.
Bond futures data from the CME FedWatch Tool shows traders assigning a 78% probability that the US Federal Reserve (Fed) maintains interest rates at 3.50% or above through Jan. 26, up from 47% on Oct. 24. Lower rates generally benefit companies reliant on leverage and often stimulate consumer credit demand.
The uncertainty stemming from the extended US government funding shutdown, which lasted until Nov. 12, could prompt the Fed to leave rates unchanged in December. Consequently, traders are closely monitoring the US Bureau of Labor Statistics’ November jobs report due Dec. 16 and the Fed’s preferred inflation gauge, the November core Personal Consumption Expenditures (PCE) index, set for release on Dec. 26.
Could the US Federal Reserve trigger Bitcoin’s next rally?
A significant shift is likely in the first half of 2026. US Fed Chair Jerome Powell’s term ends in May, and US President Donald Trump has made clear he prefers a candidate who favors a less restrictive monetary stance. No nomination date has been announced, and the process typically includes several months of Senate hearings and votes.
Bloomberg also reported that US regulators have finalized a rule that will lower capital requirements for the largest banks by Jan. 1, 2026. These developments could serve as catalysts for risk-on assets, including Bitcoin, as the Trump administration has signaled plans to stimulate economic growth through expanded government borrowing, including the “One Big Beautiful Bill Act” introduced in July.
Beyond macroeconomic considerations, two developments within the Bitcoin ecosystem may influence a potential move above $100,000. In October, the MSCI Index said it was consulting investors on whether to exclude companies whose primary focus is accumulating Bitcoin and other digital assets. A final decision is expected on Jan. 15.
Passive funds linked to Strategy (MSTR US) represent nearly $9 billion in market exposure, according to Bloomberg. Michael Saylor, founder and chairman of MSTR, said on Friday: “Strategy is not a fund, not a trust, and not a holding company. We’re a publicly traded operating company with a $500 million software business and a unique treasury strategy.”
Related: How cooling inflation historically affects Bitcoin narratives and price behavior
Bitcoin derivatives have faced persistent pressure over the past four weeks, as reflected in a 10% premium for put (sell) options compared to equivalent call (buy) contracts. Given the scale of the year-end $22.6 billion BTC options expiry on Dec. 26, traders will likely wait for the skew to ease toward a neutral 5% or below before regaining confidence.
Overall, a move toward $112,000 remains feasible for Bitcoin, though it appears more likely to materialize during the first half of 2026.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.