Fed Rate-Cut Disagreement Clouds Bitcoin’s Rebound
Federal Reserve officials are sharply divided over whether persistent inflation or a weakening labour market poses the greater policy risk, complicating plans for a December rate cut. According to WSJ’s Nick Timiraos, this level of internal disagreement is unprecedented under Chair Jerome Powell’s tenure. Some Fed members favour a 50bp cut in December, while others warn that the US economy may rebound strongly, limiting room for easing.
Bitcoin initially gained ground after US legislators resolved a government shutdown, rising from near $100,000 to $106,000. However, large holders have taken profits and Bitcoin remains stuck below its 200-day moving average at around $110,000, signalling technical resistance. ETF inflows have been modest, with just $1m net entering Bitcoin ETFs despite broader market gains.
Analysts expect that only a clear path for ending quantitative tightening and a defined rate-cut timeline will sustain Bitcoin’s recovery. In the short term, traders should watch Federal Reserve guidance in December and liquidity shifts; over the long term, improved monetary conditions could support a renewed bull cycle.
Neutral
The Federal Reserve’s unprecedented internal split over rate cuts introduces significant policy uncertainty, likely dampening liquidity and investor sentiment in the near term. Bitcoin’s rebound stalled below key technical resistance at the 200-day moving average, and ETF inflows remain minimal, echoing past episodes where Fed policy doubts led to crypto consolidation. In the short term, traders may face heightened volatility as markets await December FOMC guidance. Over the long term, a clear end to quantitative tightening and a defined rate-cut timeline could restore bullish momentum for Bitcoin.