Bitcoin rebound relies on "shadow chairman" expectations: weaker dollar and December rate cut bets become core drivers

Bitcoin’s current rebound is being driven by macroeconomic expectations, particularly speculation over the future leadership of the Federal Reserve and bets on a rate cut in December. As traders raise the probability of a 25-basis-point cut this month to around 80%, the US dollar has fallen for nine consecutive days, significantly easing financial conditions and supporting Bitcoin’s recovery from the sharp volatility in November. BTC has rebounded from the $84,000–$87,000 range to near $93,000.

Market focus is shifting from Powell’s established policies to the Fed’s future direction after his term ends in May 2026. According to Reuters, the Trump administration plans to announce a new chair nominee in early 2026, with candidates including Kevin Hassett, Christopher Waller, Michelle Bowman, Kevin Warsh, and BlackRock’s Rick Rieder. Although these candidates currently have no impact on policy voting, the “shadow chair” effect has already begun to influence yields and the dollar through expectations, indirectly affecting crypto market sentiment.

Rising rate-cut expectations and a weakening dollar are creating a positive synergy that benefits Bitcoin through improved liquidity. Meanwhile, ETF fund flow dynamics are also affecting short-term performance: there were significant redemptions in November, but as short positions are covered and the dollar weakens, prices have rebounded quickly. If ETF net inflows continue to increase, this will strengthen the rebound and absorb selling pressure from miners; conversely, large-scale redemptions could limit the upside.

The policy stances of the candidates are seen as key clues for assessing the future market environment. Hassett supports faster rate cuts and is considered bearish for the dollar; Waller favors gradual easing in line with data; Bowman prefers a gradual, stability-focused approach; Warsh leans toward maintaining higher rates for longer and a faster balance sheet reduction; Rieder may favor rate cuts to ease pressure on real estate. The market is already pricing these expectations into the yield curve.

In the short term, Bitcoin’s trend remains primarily driven by macro conditions: a weak dollar, stable long-term yields, and loose financial conditions are all positive factors. If the December decision and policy guidance continue to bolster rate-cut expectations, Bitcoin could gain further support; hawkish signals or a rebound in inflation, however, could create headwinds.

Overall, Bitcoin’s rebound is benefiting from changes in the Fed’s policy cycle, and bets on the 2026 “shadow chair” are reinforcing the market’s pricing of a more accommodative environment. For the crypto market, the dollar and interest rates remain the core variables, far outweighing the direct impact of personnel changes. (CryptoSlate)