The growing divergence among Federal Reserve officials regarding the 2026 interest rate path may continue to impact the performance of Bitcoin and the crypto market.

The Federal Reserve has cut interest rates three times in 2025, the latest on December 10th, lowering the federal funds rate range to 3.5%–3.75%. However, the latest policy projections indicate that despite interest rates remaining at their highest levels since 2008, there may only be room for one more rate cut in 2026. The significant internal disagreement within the Fed regarding the interest rate path is creating continued uncertainty for the Bitcoin and crypto markets. The report points out that the Fed's "dot plot" released in December 2025 shows policymakers with differing views on the 2026 interest rate outlook, with roughly equal numbers of officials expecting no rate cuts, one or two cuts. This divergence leaves the market without clear guidance as it enters 2026. Current median forecasts show interest rates around 3.6% at the end of 2025 and around 3.4% at the end of 2026, implying only one rate cut next year. From a market expectation perspective, CME Group data shows that investors anticipate only about a 20% probability of the Federal Reserve cutting interest rates by 25 basis points at its January meeting, while the probability of a rate cut at the March meeting has risen to about 45%. Analysts generally believe that the labor market, inflation trends (especially the impact of tariffs), and overall economic growth will remain key variables influencing policy direction. Furthermore, the uncertainty surrounding the selection of the new Federal Reserve Chairman, Jerome Powell, whose term ends in May 2026, is also considered a potential variable. Some analysts believe that the new leadership may continue a gradual easing path, thus providing support for risk assets in the medium to late stages. Regarding industry perspectives, some researchers predict that if the job market continues to weaken, even with a temporary rebound in inflation, the Federal Reserve may still implement two rate cuts in 2026; however, a pessimistic scenario exists where inflation rises again, forcing a halt to rate cuts and liquidity injections, which could put significant pressure on stocks and crypto assets. The report concludes that compared to the market's previous optimistic expectations of a "full dovish turn," the Federal Reserve's current more cautious stance is weakening the recovery momentum in the crypto market. However, in the medium to long term, expectations of declining interest rates and leadership changes may still provide temporary benefits to high-risk assets such as Bitcoin. (Cointelegraph)