The Bitcoin market is experiencing a period of uncertainty marked by speculation surrounding the next direction of the U.S. Federal Reserve. As President Donald Trump publicly announces his intentions regarding the future Fed chair, the cryptocurrency struggles to regain its late-2025 momentum.
Trump Reveals His Plans for Fed Leadership
President Donald Trump has made it clear that he has chosen his pick to succeed Jerome Powell as head of the Federal Reserve when Powell’s term ends in May 2026. Two candidates dominate the race: Kevin Warsh, former Fed governor from 2006 to 2011, and Kevin Hassett, current director of the National Economic Council.
According to The Wall Street Journal, Trump met with Kevin Warsh for 45 minutes at the White House for an in-depth interview focusing on his ability to support a lower interest rate policy. The president was explicit about his selection criteria: the next Fed chair must believe in « much lower » interest rates.
Scott Bessent, the Treasury Secretary nominated by Trump and confirmed by the Senate on January 27, 2025, indicated there was « a very good chance » Trump would announce his choice before Christmas. Bessent mentioned five potential candidates, including Kevin Warsh, Kevin Hassett, Christopher Waller (current Fed governor), Michelle Bowman (Fed Vice Chair), and Rick Rieder from BlackRock.
The Fed and Monetary Policy: A Critical Issue for Bitcoin
The Federal Reserve’s monetary policy has a direct and significant impact on the cryptocurrency market. When the Fed tightens its monetary policy, global liquidity contracts, particularly affecting Bitcoin as a highly volatile and risk-sensitive asset. Conversely, monetary easing can encourage the return of liquidity to risk assets, including cryptocurrencies.
In December 2025, the Fed reduced its benchmark rate by a quarter point to a range of 3.50% to 3.75%, while signaling a pause in future adjustments with only one additional cut expected for 2026. This more cautious stance than anticipated maintained pressure on Bitcoin, which traded around $92,000 after the announcement.
The growing correlation between Bitcoin and traditional stock markets intensified in 2025, reaching a coefficient of 0.5 with the S&P 500. This convergence challenges Bitcoin’s traditional status as an independent safe-haven asset, bringing it closer to the dynamics of traditional risk assets.
Bitcoin Under Pressure: Disappointing Year-End Performance
Bitcoin is currently experiencing a difficult period, trading around $86,000 as of December 18, 2025. This situation marks a significant decline from the all-time high of $126,073 reached in October 2025, representing a correction of approximately 27%.
Several factors explain this weakness:
Massive Bitcoin ETF outflows constitute one of the main bearish catalysts. Over the past four weeks, spot Bitcoin ETFs recorded cumulative withdrawals of $4.34 billion. The week of November 17-21, 2025, was particularly challenging with $1.2 billion in net outflows. BlackRock’s iShares Bitcoin Trust ETF (IBIT) suffered especially with nearly $1.09 billion in withdrawals during that single week.
Widespread risk aversion also weighs on the market. Investors remain cautious amid uncertainties regarding the trajectory of interest rates in 2026 and the potential impact of Trump’s tariff policies on inflation. Bitcoin options markets reflect this caution, with high demand for downside protection.
Liquidations in the derivatives market amplified volatility. The sharp increase in crypto sector debt, with borrowing reaching a record $74 billion in the third quarter of 2025, made the market particularly vulnerable to sharp corrections.
Contrasting Outlooks for Late 2025 and 2026
Despite current weakness, some analysts maintain optimistic perspectives for the coming months. Forecasts for December 2025 vary considerably by source.
The optimistic scenario from 30rates predicts a range between $134,432 (minimum) and $154,670 (maximum) for December, with an expected close at $144,551. This projection relies on the traditional year-end « Santa Rally » effect and the continuation of institutional flows into Bitcoin ETFs.
Other forecasts are more cautious. Cifra Markets estimates Bitcoin could reach $130,000 by December 2025, while more conservative analysts anticipate extended consolidation around $110,000 to $115,000.
The critical threshold of $87,000 appears decisive according to several analysts. A break below this level would revive a pullback scenario toward $73,000. Conversely, maintaining above this support could allow a gradual rebound toward $100,000.
For 2026, forecasts point to robust annual growth, with targets around $141,926 by mid-year and $149,545 by year-end according to 30rates. This growth would be supported by accelerated institutional adoption and growing integration into traditional portfolios.
The Key Role of Liquidity and the Fed’s Balance Sheet
Beyond interest rates, the evolution of the Fed’s balance sheet constitutes a determining factor for the cryptocurrency market. After reducing its balance sheet from $9 trillion to $6.5 trillion as part of its quantitative tightening (QT) program, the Fed ended this program in early December 2025.
Bank of America analysts predict the Fed could announce a monthly increase of $45 billion to its balance sheet starting in January 2026. This potential expansion of liquidity could constitute a major catalyst for Bitcoin and cryptocurrencies generally, historically very sensitive to global liquidity conditions.
Political Influence on Monetary Policy
Tension between Trump and Powell manifested publicly several times during 2025. The president called the Fed chair « grossly incompetent » and stated he would like to « fire his ass. » These verbal attacks reflect Trump’s frustration with maintaining interest rates he considers too high.
The conflict between the executive and the central bank raises fundamental questions about Fed independence. During an unusual visit to Fed headquarters in July 2025, the first by a sitting president in about twenty years, Trump publicly confronted Powell about building renovation costs, creating a moment of tension captured by cameras.
Implications for the Crypto Ecosystem
The regulatory environment under the Trump administration appears broadly favorable to cryptocurrencies. Scott Bessent, the new Treasury Secretary, declared himself a supporter of the crypto sector, stating that « crypto is about freedom and the crypto economy is here to stay. »
Trump himself proclaimed himself the first « crypto president » and announced in March 2025 the creation of a strategic Bitcoin reserve also including Solana, Cardano, Ripple, and Ethereum. This initiative aims to make the United States the « world capital of crypto. »
However, the crypto market remains vulnerable to macroeconomic shocks. Continued Bitcoin ETF outflows, combined with cautious signals from the Fed, suggest institutional investors are adopting a wait-and-see approach. The return of sustained net inflows into ETFs would constitute an important signal of improving market sentiment.
The coming weeks will be crucial in determining whether Bitcoin can stabilize its current price and initiate a rebound toward $100,000, or if a new downleg toward lower supports will materialize. Trump’s decision regarding the future Fed chair, expected in early 2026, could constitute a major catalyst influencing Bitcoin’s trajectory and the entire cryptocurrency market.
