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.

According to Odaily Planet Daily, the Federal Reserve has cut interest rates three times in 2025, the latest being on December 10th, lowering the federal funds rate range to 3.5%–3.75%. However, the latest policy projections indicate that although interest rates remain at their highest levels since 2008, there may only be one more rate cut possible in 2026. The significant internal disagreement within the Federal Reserve regarding the interest rate path is bringing continued uncertainty to the Bitcoin and cryptocurrency markets.

The report points out that the Federal Reserve's "dot plot" released in December 2025 shows that policymakers are divided on the 2026 interest rate outlook, with roughly equal numbers of officials expecting no rate cuts, one rate cut, or two rate cuts. This divergence leaves the market without clear guidance as it enters 2026. Current median forecasts show interest rates at approximately 3.6% at the end of 2025 and approximately 3.4% at the end of 2026, implying only one rate cut next year.

Market expectations, according to CME Group data, show 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, Federal Reserve Chairman Jerome Powell's term will end in May 2026, and the uncertainty surrounding the selection of his successor is also considered a potential variable. Some analysts believe that the new leadership may continue the gradual easing path, thereby providing support for risk assets in the medium to late stages.

Industry experts predict that if the job market continues to weaken, the Federal Reserve may still implement two interest rate cuts in 2026, even if inflation rebounds temporarily. However, there is also a pessimistic scenario where inflation rises again, forcing a halt to interest 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 lower interest rates and a change in leadership may still provide some short-term benefits to high-risk assets such as Bitcoin. (Cointelegraph)