Bitcoin Price: Rate Cuts and a Return to Money Printing?

10 December 2025 may go down as one of the most consequential dates in Federal Reserve history. Days ago, the Fed cut interest rates by 25 basis points while simultaneously announcing $40 billion in monthly Treasury bill purchases. 

What appears to be a straightforward monetary easing has revealed something far more complex: a central bank caught between contradictory forces, implementing policies that both tighten and loosen at the same time. For Bitcoin investors, this unprecedented monetary confusion may present both opportunity and volatility ahead.

A Fed divided?

The December rate cut exposed the deepest fractures within the Federal Reserve in six years. Three members dissented, but remarkably, they disagreed in opposite directions. One member voted for a larger 50 basis point cut, while two voted against any cut at all. This level of internal conflict signals that even the experts tasked with managing monetary policy cannot agree on the appropriate path forward.

Chair Jerome Powell now leads an institution where Trump appointee Stephen Miran pushed for aggressive 50 basis point cuts, while other members advocated for holding rates steady. The political influence over monetary policy, long a theoretical concern, has become undeniably real.

Adding to the confusion, Powell admitted the Fed is making decisions while essentially flying blind. A 43-day government shutdown delayed critical October and November economic data, forcing policymakers to view incoming numbers with what Powell called ‘a skeptical eye.’ 

Quantitative Easing by any other name

While signaling that rate cuts may be finished for now, the Fed simultaneously announced it will purchase $40 billion in Treasury bills per month starting on 12 December. They are calling this program ‘Reserve Management’. The market, however, seems to recognize it as balance sheet expansion.

This isn't technically Quantitative Easing in the traditional sense, but the practical effect on liquidity is nearly identical. The Fed stopped Quantitative Tightening just 12 days before announcing these new purchases. Powell indicated these elevated Treasury purchases will continue for ‘a few months,’ injecting substantial liquidity into the financial system.

In other words, the Fed is adding liquidity without the formal announcement of a stimulus program. But money flowing into the system has the same effect regardless of what officials choose to call it.

What this means for Bitcoin

Bitcoin currently trades around $93,000, and the cryptocurrency market is beginning to price in the implications of this new monetary regime. 

Several factors suggest significant movement ahead:

1. Increased liquidity flows to risk assets – Lower interest rates make borrowing cheaper and traditional safe assets less attractive. When the Fed simultaneously cuts rates and injects $40 billion monthly into Treasury markets, it creates substantial additional liquidity. Historically, this excess liquidity finds its way into higher-risk, higher-return assets. Bitcoin, with its fixed supply and increasing institutional adoption, stands to benefit as investors search for alternatives to low-yielding bonds and weakening dollar positions.

2. Weakening US Dollar dynamics – Rate cuts typically weaken the US dollar as international investors seek better returns elsewhere. Powell's admission that inflation remains at 2.8% (40% above the Fed's target) while implementing dovish policy suggests the dollar may face extended pressure. A weaker dollar has historically correlated with Bitcoin strength, as international investors view cryptocurrency as both a hedge against currency depreciation and an alternative store of value.

3. The Stagflation setup – Powell acknowledged the Fed's ‘two goals are a bit in tension’ and noted that ‘conditions in the labor market are cooling, and inflation remains somewhat elevated.’ This is the textbook definition of stagflation: slowing economic growth combined with persistent inflation. For context, the Fed's dual mandate to support both employment and price stability has become what Powell called ‘a dual trap.’ Stagflationary environments have historically been challenging for traditional assets but could be potentially beneficial for Bitcoin. When inflation erodes purchasing power while economic growth stalls, investors seek alternatives to both cash (losing value to inflation) and stocks (vulnerable to recession). Bitcoin's narrative as ‘digital gold’ may become more compelling in these conditions.

4. Short-term volatility – The immediate market reaction to rate decisions is often unpredictable. After a previous rate cut earlier in 2025, Bitcoin declined by approximately 10% in the following days, as traders who had already priced in the decision took profits. Similar volatility is likely in the days following this announcement. 

However, the medium-term outlook appears more favorable. Extended periods of accommodative monetary policy have historically coincided with stronger performance for crypto assets. 

Liquidity wave flag?

Possibly the most significant takeaway is that the Federal Reserve has institutionalized contradiction. They are cutting rates while warning cuts are finished, and ending Quantitative Tightening while expanding Treasury purchases. They are projecting only one additional cut for 2026 while acknowledging labor market weakness and arguing job gains were overstated by 60,000 positions.

Powell himself admitted that rate hikes are unlikely, stating the Fed will either cut rates ‘a little or a lot.’ This asymmetric policy stance, where cuts remain on the table but hikes are essentially ruled out, creates a one-way ratchet toward easier monetary conditions.

For Bitcoin, this represents a fundamental shift in the operating environment. The Fed that aggressively tightened throughout 2022 and 2023 has transformed into an institution that cannot tighten even as inflation persists above target. Political pressure, economic uncertainty, and internal division have essentially trapped the Fed in an accommodative posture.

The Fed's December decision represents a clear pivot toward easier monetary conditions. While short-term volatility is inevitable as markets digest these changes, the medium-term direction increasingly favors risk assets.

Three rate cuts this year, $40 billion in monthly Treasury purchases, admission of labor market weakness and explicit statements that rate hikes are off the table all point in the same direction: liquidity is coming back into the financial system.

Bitcoin reacts to liquidity. And the Federal Reserve signaled exactly where liquidity is heading.

How to buy crypto in 5 steps

Looking to buy crypto online? We make it as simple as possible to start:

1. Choose a trusted crypto platform – select a reputable exchange like Crypto.com with strong security and positive customer reviews.
2. Create an account – sign up with your email, complete KYC verification, and set up two-factor authentication.
3. Deposit funds – add money using a bank transfer, debit/credit card, or other supported payment methods.
4. Purchase crypto – search for your preferred crypto on the platform and place a buy order.
5. Secure your crypto – either let us handle the storage or transfer your crypto to a personal wallet for peace of mind.

Important Information: This is informational content sponsored by Crypto.com and should not be considered as investment advice. Trading cryptocurrencies carries risks, such as price volatility and market risks. Before deciding to trade cryptocurrencies, consider your risk appetite. If you use a non-custodial wallet, you are responsible for securely storing your seed phrase. Losing it may result in loss of access to your assets.