Bitcoin is bracing for a huge Fed price earthquake after a surprise reversal

Bitcoin has recovered slightly from this week's sell-off that sent the price of Bitcoin soaring towards $80,000, raising fears that the nightmare of a Bitcoin price collapse may be about to become a reality.

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The massive sell-off in bitcoin prices since it soared to a record high of $126,000 per bitcoin just last month has sparked warnings of an imminent trillion-dollar cryptocurrency collapse.

Now, as US President Donald Trump is expected to “open the flood gates”, traders are scrambling to adjust to the wildly swinging prospects of a rate cut by the Federal Reserve in December – which has suddenly turned dovish.

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ForbesEthereum Co-Founder Issues Stark Warning BlackRock Could Spell Disaster for Bitcoin Amid Sudden Price Sell-offBy Billy Bambrough

Federal Reserve Chairman Jerome Powell is considering cutting interest rates in December – something that could send the price of Bitcoin sharply higher.

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The odds of a 25 basis point rate cut at the Fed's December meeting have risen to 70%, up from just 39% the day before, according to CME tracker FedWatch.

The jump comes after the comments calmed market fears that the Federal Reserve may leave interest rates unchanged next month following stronger-than-expected jobs data in September.

“I continue to see room for further near-term adjustment of the target range for the federal funds rate to move the policy stance closer to the neutral range,” New York Fed President John Williams told the Wall Street Journal.

“Looking ahead, it is essential to bring inflation back to our longer-term target of 2% on a sustainable basis. It is equally important that we do so without creating undue risks to our maximum employment target.”

The change in tone by a senior Fed official comes after minutes from the Fed's latest meeting revealed deep divisions among policymakers and late US jobs data came in hot, significantly reducing the possibility of a third straight 25 basis point cut.

Bitcoin and cryptocurrency traders sounded positive notes despite the deteriorating monetary policy backdrop this week, remaining upbeat even as Bitcoin charts fell nearly 40% in just over a month.

“Bitcoin’s decline from October highs above $125,000 to below $90,000 now reflects a convergence of headwinds that has led to a sharp shift in risk aversion,” Nicholas Roberts Huntley, CEO of Blueprint Finance, said via email.

“The downturn was driven by tariff headlines, a rising dollar, and a wave of forced liquidations that hit an exhausted market simultaneously. However, nothing has changed in terms of long-term fundamentals. If anything, this type of reset tends to eliminate excess leverage and pave the way for a healthier move to the upside. At the end of the year, I expect Bitcoin to stabilize and move back higher, with a reasonable trading range between $95,000 and $110,000 if macroeconomic conditions calm down and flows turn positive again, and a strong price rally by December is still on the table.

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ForbesJP Morgan Just Called Bitcoin's Price Bottom — and Predicts a Huge $28.3 Trillion Gold Challenge in 2026By Billy Bambrough

The price of Bitcoin has fallen sharply from its all-time high of $126,000 per BTC, and some are predicting that a rebound is about to begin.

Forbes digital assets

Bitcoin and cryptocurrency market watchers have also pointed to Bitcoin price struggles through 2025 as a sign that the latest bull market has not yet begun.

“The bear market started in December 2024,” Andreas Brecken, founder of trading platform SideShift.ai, said in email comments.

“This is evident from the charts for BTC/EUR and BTC/GOLD. This has been masked by the dollar's historical inflation levels. Now that we are already seeing blood in the streets and widespread capitulation, I expect the next bull market to begin in the first quarter of 2026.”

Others described the Fed's planned end of its quantitative tightening program, designed to suck liquidity from the system, as potentially helping to reignite the Bitcoin price boom through 2026.

“With the Fed’s quantitative tightening ending on December 1, the August-October rises may be just a midpoint,” Robert Lu, head of research at institutional asset and returns management platform Kellen, said via email.

“If Bitcoin breaks out of its programmed rhythm, I think the market may misprice both potential upside and downside risk, and this could be the first cycle where the peak doesn't look like a peak.”

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