Why did Bitcoin suddenly skyrocket today? The Federal Reserve cuts interest rates by 25 bps, and Jerome Powell's one statement triggered a buying spree.

The Federal Reserve cut interest rates by 25 basis points to 3.5% to 3.75%, causing a sudden surge in global financial markets. The Dow soared over 600 points, spot gold jumped sharply from lows to $4,238.78, and Bitcoin temporarily surged above $94,000. Fed Chair Jerome Powell explicitly ruled out the possibility of a rate hike, stating “a rate increase is not in anyone’s basic expectation,” and announced the purchase of $40 billion worth of U.S. Treasuries over the next 30 days starting December 12.

Powell’s Key Remarks Ignite Bullish Market Sentiment

The core reason for Bitcoin’s sudden rally today lies in Powell’s key remarks during the press conference, which completely reversed market expectations. He first clearly ruled out the possibility of a rate hike, emphasizing that “a rate increase is not in anyone’s basic expectation,” and highlighted that the current economic environment does not support tightening policies. This statement alleviated concerns that the Fed might become hawkish again due to inflation rebound, providing short-term stability to financial markets.

More importantly, Powell emphasized that the benchmark interest rate is currently in the “broader neutral range,” neither significantly restraining the economy nor markedly boosting demand, placing the Fed “in a good position to wait and observe how the economy evolves.” He pointed out that the cumulative 175 basis points of rate cuts since last year have already provided substantial support to the economy, making it more appropriate to be patient and wait for data at this stage.

Regarding inflation concerns, Powell indicated that recent increases in commodity prices mainly reflect one-time shocks caused by tariffs, and do not mean that inflationary pressures are reigniting. He said, “The economy now is not like an overheated economy that drives labor-led inflation.” Market interpretations suggest that the Fed’s concerns over inflation pressures have been significantly reduced, leaving room for continued easing policies.

Informa Global Markets commented: “So-called ‘hawkish rate cuts’ are just that.” They noted that Wall Street is prepared to see more aggressive hawkish votes, but when it comes to voting, the hawks have capitulated. This unexpected dovish stance has become a catalyst for a broad market rebound.

$40 Billion Bond Purchase Plan: A Key Liquidity Injection

Another key factor behind Bitcoin’s surge today is the Fed’s announcement to start purchasing U.S. Treasuries on December 12, planning to buy $40 billion worth of Treasuries over 30 days. Kobeissi’s analysts pointed out that this represents a direct injection of liquidity into the financial system, rather than a surface-level quantitative easing, which could trigger a significant rally in risk assets like Bitcoin.

This bond-buying operation differs from traditional QE in its directness and targeting. By purchasing Treasuries, the Fed injects cash directly into the banking system, increasing base money supply. When liquidity is abundant, capital tends to seek higher-yielding assets, and risk assets such as cryptocurrencies, stocks, and gold often become first choices. Although $40 billion is relatively small compared to typical QE scales, in the current market environment, this clear signal of liquidity is enough to trigger reallocations of funds.

The Logical Chain of the Three Market Reactions

Dollar Plunge: Expectations of rate cuts and bond purchases weaken the dollar’s appeal, with the dollar index dropping 45 points to 98.60.

Gold Surge: A weaker dollar and loose liquidity drive safe-haven assets, with spot gold soaring $57 to $4,238.78.

Bitcoin Stabilizes and Rebounds: Liquidity injection and risk appetite revival help Bitcoin stabilize above $92,000 and form a double bottom pattern.

This synchronized rise across multiple assets indicates that markets interpret the Fed’s actions as an extension of the easing cycle rather than a one-time technical adjustment.

Double Bottom Pattern Indicates Bitcoin Could Hit $100,000

(Source: Trading View)

The technical explanation for Bitcoin’s sudden rally today is that the price formed a textbook double bottom near the $83,000 support zone, indicating a potential reversal in the medium-term trend. The price has already returned to the previous resistance around $92,000 and is now attempting to establish it as a new support level.

The MACD indicator shows increasing momentum, with the signal line bending upward and the histogram approaching a golden cross, indicating growing buying pressure. If Bitcoin can hold support above the neckline area, technical structures suggest it will advance toward the next major resistance at $100,600. If momentum accelerates further, it could rise even more toward $108,000.

Goldman Sachs forecasts that by December 2026, inflation will slightly decline to around 2.34%, and expects the Fed to implement two rate cuts this year in March and June. However, the Chicago Mercantile Exchange (CME) predicts that after Powell steps down as chair in May, the Fed will not cut rates until the June meeting. These divergences reflect ongoing uncertainty about future policy paths.

If the price breaks below the $90,000–$92,000 zone, it would invalidate the breakout attempt and risk falling back to the demand level of $83,000. However, current market structures and indicators favor continued upward movement. The Fed’s dovish stance and liquidity injection plans provide strong macro support for Bitcoin.