Bitcoin price increases as Trump considers selecting new Fed chair by Christmas
Bitcoin’s price surged past $91,000 on Tuesday, indicating optimism that President Donald Trump may announce a new Federal Reserve chair who is more dovish before Christmas. The largest digital asset by market capitalization, Bitcoin is currently trading around $91,300, showing a 4.3% increase within the last 24 hours, marking one of its most substantial daily gains in recent weeks after a period of turbulence.
The broader cryptocurrency market also saw gains, with the global digital asset market capitalization increasing by 3.5% to $3.2 trillion, a small recovery following significant declines last week. The recent upsurge was fueled by comments from US Treasury Secretary Scott Bessent, who expressed confidence that President Trump would reveal his choice for the next Federal Reserve chair ahead of Christmas.
According to Bessent, “We’re going to have the last interview in the second round today. We got five very strong candidates,” indicating progress in the selection process. The current Fed chair, Jerome Powell, is set to complete his term in May. The market speculates that Trump could choose a successor who is more inclined to interest rate cuts, increasing the likelihood of an earlier or deeper rate reduction.
Investors are increasingly forecasting an 85% likelihood of a rate cut in December, promoting growth in risk assets spanning from equities to cryptocurrencies. Bitcoin had been relatively stable around the high $80,000 range, hinting at an improved risk outlook. Fed discussions have started leaning towards easing, with more officials signaling support for cuts. The market is closely monitoring US jobless claims data and the ADP payroll report to gauge the pace of the Fed’s pivot.
Despite these positive indicators, challenges persist. Credit risks in AI-focused tech companies are climbing, with expanding credit default swaps suggesting dwindling enthusiasm within the sector. Concerns about spending trends in AI technology, especially at Nvidia, have caught investors’ attention since Bitcoin and major altcoins often mirror movements in indices like the Nasdaq.
Additionally, crypto exchange-traded funds are seeing net outflows, with several products trading below their indicative values. The substantial Bitcoin treasury held by MicroStrategy is under scrutiny, as its stock is on an MSCI delisting watchlist, raising fears of index-related sell-offs potentially affecting the crypto market.
Despite the recent rally, caution remains evident in Bitcoin’s options market. QCP Capital analysts note that demand for downside protection remains high, while positioning and implied volatility are trending downward. Rallies towards the mid-$90,000 level could face pressure from ETF-related selling, with the $80,000-$82,000 range serving as a crucial support level since last week’s substantial decline.
