'Santa rally' now unlikely as bitcoin slips after Fed delivers 'hawkish cut': analysts

Bitcoin retreated to around $90,000 on Thursday after the Federal Reserve delivered a widely expected 25 basis-point rate cut, but paired it with guidance that analysts interpreted as cautious — sending risk assets lower despite a brief pre-meeting rally.

BTC had climbed as high as $94,500 ahead of the announcement, then reversed sharply, extending a yearlong pattern in which seven of the past eight FOMC meetings have been followed by bitcoin declines.

The latest move leaves bitcoin down from recent attempts to reclaim the mid-$90,000s, while ether traded under $3,200 and the broader crypto market dipped as altcoins shed value, according to The Block’s price page. It also means BTC and ETH have posted negative performance over the last 12 months and year-to-date.

Powell’s tone: dovish surface, hawkish undertones

The Fed’s rate cut came alongside messaging that was, at times, dovish, but reinforced a cautious policy stance.

A statement from Federal Reserve Chair Jerome Powell acknowledged that labor-market cooling justified the bank’s funding decision and described the policy rate as sitting "in neutral territory." However, he emphasized that future decisions depend heavily on incoming data and noted that risks remain tilted to the upside for both unemployment and inflation.

The committee’s projections showed only one additional cut penciled in for 2026, unchanged from September. Also, the 9–3 vote represented the largest number of dissents since 2018, highlighting a divided committee as it navigates what Powell called a "very challenging" environment.

Multiple analyst insights reviewed by The Block described the overall result as a calibrated signal rather than a pivot and argued that the Fed’s shift resembled the careful posture shown after its last cutting cycle. They also noted that the Fed raised its growth outlook and lowered its inflation expectations, but also included language suggesting a higher bar for additional easing.

Nic Puckrin, co-founder of Coin Bureau, said the cut "wasn’t as hawkish as some expected," but the number of dissents and the Fed’s decision to anticipate only one rate cut next year "injects a fresh dose of uncertainty" into risk assets. "This isn’t enough to spark a Santa rally for bitcoin," he said.

'Not enough for new all-time highs this side of Easter'

Alongside the cut, the Fed announced it will purchase $40 billion in Treasury bills over the next 30 days, beginning Dec. 12, to maintain ample reserves in the financial system. Officials stressed the move is not quantitative easing, but analysts said it nonetheless adds a liquidity tailwind.

Matt Howells-Barby, Kraken’s head of growth, stated the combination of a neutral-leaning rate stance and reserve-management purchases could support crypto markets into early 2026. Yet, he also warned that the upcoming voter rotation at the Fed could shift the balance more hawkish, which may limit the odds of aggressive easing early next year.

Paul Howard of Wincent added that the Fed’s "wait-and-see" posture kept crypto largely anchored. "Any monetary policy loosening is welcome," he said, but the scale of the cut and the committee’s mixed messaging "is not enough for new all-time highs this side of Easter."

Thin conviction despite ETF inflow support

Amid the policy outcome, ETF flows continued to paint a constructive underlying picture.

U.S. spot bitcoin ETFs added $224 million in net inflows on Tuesday, including $193 million into BlackRock’s IBIT. In comparison, Ethereum products drew $57.6 million, and Solana and XRP funds saw a combined $15 million in inflows, per The Block’s data. Despite steady demand, price action was muted.

BRN Head of Research Timothy Misir opined that the post-cut fade reflected a market that "welcomed the cut but not the guidance," characterizing the day’s move as another version of the "hawkish cut" that traders expected heading into the event. He added that institutional appetite remains solid, noting that smart-money wallets holding between 10 and 10,000 BTC have accumulated roughly 42,565 BTC since Dec. 1. However, retail trimming continues to cap momentum.

Exchange balances continue to decline, reinforcing structural scarcity. Still, short-term holders are reducing exposure, creating a tug-of-war that has kept BTC inside a tightening range, BRN’s analyst argued.

"The cut is supportive, but conditional," Misir said. “Institutions are buying dips while retail sells into stress. The question is whether ETF demand can keep absorbing supply until macro clears.”