- Markets price in just two rate cuts for 2026, but Trump’s hint of appointing a deeply dovish Fed chair raises the odds of far more aggressive easing.
- Bitcoin ETFs show tactical outflows, yet BlackRock’s IBIT posts a strong $42.2M inflow and $2.2B trading volume, reinforcing institutional conviction despite market volatility.
- A pro-liquidity Fed shift under Trump could turbocharge crypto, with easier policy, lighter rates, and ETF momentum aligning for a potential Bitcoin all-time high in 2026.
As the Federal Reserve’s December meeting looms, interest rate futures paint a cautious picture for 2026: just two quarter-point cuts on the horizon. Yet, President Donald Trump’s recent tease of a new Fed chair (poised to slash rates aggressively) has ignited speculation that monetary policy could veer far more accommodative, supercharging assets like Bitcoin toward all-time highs.
Futures Signal Restraint Post-Dec Cuts
CME FedWatch data shows traders pricing in a mere 50 basis points of easing across the Federal Open Market Committee’s (FOMC) eight 2026 meetings, with the benchmark rate dipping to around 3% by year-end from today’s 3.75%-4% band.
For the December 9, 2026, session, probabilities cluster heavily around 275-300 bps (26.6%) and 300-325 bps (28%), with a 99.6% chance of no dramatic shift from current levels. This implies a steady unwind of 2025’s hikes amid cooling inflation, but skeptics warn of sticky prices derailing even that.
The outlook tempers post-December expectations. With an 84.3% odds of a 25 bps trim next week, markets see the Fed pausing to assess Trump’s tariff-heavy agenda. Two cuts are the baseline, but upside risks to growth under Trump could cap easing.
Trump’s Chair Pick: A Dovish Pivot in Waiting?
Trump upended the narrative Sunday, declaring aboard Air Force One: “I know who I am going to pick… We’ll be announcing it.” The frontrunner? White House economic adviser Kevin Hassett, whose pro-growth bent aligns with Trump’s calls for “way more” cuts to juice the economy. Betting markets peg Hassett at 80% odds, eclipsing rivals like Kevin Warsh.
Powell’s term expires in May 2026, thrusting the nominee into a hawkish FOMC rotation. Analysts predict a “shadow chair” dynamic, where Trump’s pick shadows policy, potentially forcing extra cuts to counter tariff-induced inflation. “Hassett would prioritize liquidity over orthodoxy,” notes a Reuters report, echoing Trump’s litmus test for cheaper loans. Early 2026 announcement could accelerate this shift, per Bloomberg.
Bitcoin ETFs: Outflows Mask Underlying Strength
Crypto markets, hypersensitive to rates, felt the ripples. Spot Bitcoin ETFs logged a $14.9 million net outflow yesterday, with BlackRock’s iShares Bitcoin Trust (IBIT) the lone bright spot at $42.2 million inflow amid broader redemptions from ARK and Grayscale.
Total assets hover at $122 billion, but daily net flow flipped negative after weeks of gains.
Yet, IBIT’s resilience shines: It clocked $2.2 billion in volume, ranking fourth among U.S. ETFs, trailing only SPY, QQQ, and DIA, despite BTC dipping to $92,982. Year-to-date, IBIT’s inflows top $62.7 billion, which shows the institutional hunger.
Outflows are tactical, and Trump’s Fed pivot could unleash $100K+ BTC, bolstering the thesis for a 2026 all-time high.
The Road to ATH: Rates, Politics, and Crypto Convergence
Trump’s chair gambit strengthens the bull case for Bitcoin’s next leg up. With futures implying sub-3% rates by late 2026 and a dovish successor in play, liquidity floods risk assets. IBIT’s volume surge, up 45% from averages, signals conviction, even as outflows reflect profit-taking.
However, critics caution that Tariff wars could spike inflation, prompting hikes. But for now, the stars align for crypto’s resurgence.
Disclaimer: The facts and analysis presented here are only for informational purposes. Readers should not interpret the content of this article as financial advice or product recommendations.
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