On the Eve of a Major Dollar Devaluation, Bitcoin Awaits the Final Spark

After months of debate, the macro backdrop shifted again on December 10, 2025: the Federal Reserve cut the federal funds target range by 25 bps to 3.50%–3.75% and leaned cautious on the path ahead. While this move was widely discounted, the subtle but important changes in the statement and implementation details matter for crypto liquidity and risk appetite. See the Fed’s implementation note and independent takes from large asset managers for context. (Federal Reserve, J.P. Morgan Asset Management, Nuveen, TIAA.) (federalreserve.gov)

Meanwhile, the U.S. dollar has been sliding. The dollar index is on track for its steepest annual drop since 2017, even as the Fed positions policy just “above neutral.” That combination—easing policy and a weaker dollar—has historically unlocked global risk-on flows and can be a powerful tailwind for scarce, dollar‑sensitive assets like bitcoin. (Reuters, Reuters—Waller comments.) (reuters.com)

What’s new is not just rates, but the rules of the road. The United States now has a federal stablecoin law: the GENIUS Act. It passed both chambers with bipartisan votes and was signed into law on July 18, 2025, establishing reserve, disclosure, and supervisory requirements for U.S. dollar–pegged stablecoins. That clarity reduces settlement frictions and can deepen crypto‑fiat linkages—another structural positive for bitcoin liquidity over time. (Congress.gov, White House, AP, Reuters.) (congress.gov)

Across the Atlantic, the EU’s MiCA regime continues to tighten expectations on crypto‑asset service providers, with ESMA reminding firms about the end of key transitional windows and consulting on competence standards—important signals for global harmonization of regulation. (ESMA, Hogan Lovells overview.) (esma.europa.eu)

What the bitcoin chain is telling us right now

• ETFs remain a structural buyer. U.S. spot bitcoin ETFs saw some of their strongest weekly inflows in October, even with choppy price action—evidence that institutional demand is more persistent than past cycles. (Yahoo Finance.) (finance.yahoo.com)
• Short‑term holders are under stress. Glassnode data show the supply held at a loss by short‑term holders rising to the highest since the FTX period—a setup that often precedes either capitulation or sharp reversals when marginal sellers exhaust. (CoinDesk summary of Glassnode, Glassnode Weekly, Week 50.) (coindesk.com)
• Long‑term holders have been distributing into strength since mid‑year but at a decelerating pace, while ETFs and corporate treasuries gradually absorb supply—one reason this cycle’s drawdowns have been orderly. (Glassnode Weekly, Week 44, Coin Metrics cycle commentary.) (insights.glassnode.com)

Macro fuel meets policy spark

• Rates are lower, but policy is still restrictive. Officials note policy remains 50–100 bps above neutral, implying scope for additional cuts if the labor market softens further—potentially easing financial conditions into 2026. (Financial Times, MarketWatch.) (ft.com)
• The dollar’s 2025 drawdown amplifies the bitcoin narrative. A falling DXY tends to support hard‑asset and alternative‑reserve stories, especially with U.S. deficits and net interest costs at historically elevated levels—undermining confidence in fiat savings over multi‑year horizons. (Reuters, American Action Forum summary of CBO, CRFB.) (reuters.com)
• Regulation, not rhetoric. With the GENIUS Act in force and OCC processing crypto trust charters, the U.S. has moved from paralysis to policy. Expect the stablecoin base layer—fully reserved, dollar‑linked settlement—to grow and, in turn, to lower on‑ramps into bitcoin. (Axios, White House.) (axios.com)

Under‑the‑hood progress: protocol_upgrade and plumbing Bitcoin’s base layer keeps improving in ways that matter for fees, reliability, and transaction confirmation. In 2025, Bitcoin Core 28.0 introduced notable mempool policy changes—including TRUC (BIP‑431) standardness for version‑3 transactions and new tools to make fee‑bumping more predictable. These aren’t flashy features, but they reduce friction for wallets and services during congestion and help keep the network robust as demand scales. (Bitcoin Core 28.0 release notes.) (bitcoin.org)

Why the “final spark” could be close

• A decisive break lower in the dollar, another step down in policy rates, or a renewed surge of ETF inflows could flip the near‑term balance from “supply overhang” to “demand shock.” The mix of structural (ETF), policy (regulation and stablecoins), and macro (rates and DXY) supports is in place; what’s missing is a catalyst with timing. (CME FOMC recap, Yahoo Finance ETF flows.) (cmegroup.com)
• On‑chain positioning suggests “spring‑coiling.” With short‑term holders nursing losses, any upside impulse that pushes price back above their cost basis tends to unleash forced buying as risk is unwound—fuel for trend extension. (Glassnode Weekly.) (insights.glassnode.com)

Risks to monitor

• Policy path ambiguity: FOMC dissents highlight a narrower consensus; a growth scare or inflation surprise could alter the glide path. (J.P. Morgan Asset Management.) (am.jpmorgan.com)
• Fiscal dominance: elevated net interest outlays can keep real yields volatile—impacting correlations between bitcoin, equities, and the dollar. (American Action Forum.) (americanactionforum.org)
• Regulatory implementation: while the U.S. now has a stablecoin law, supervisory details (and EU MiCA authorizations) will define how fast fiat‑to‑crypto rails actually scale. (ESMA.) (esma.europa.eu)

Practical takeaways for crypto users

• For investors, the blend of easing U.S. policy, a softer dollar, and clearer regulation is the long‑term setup bitcoin has been waiting for. Near‑term, respect the on‑chain supply overhang and manage entries; mid‑term, the structural thesis looks stronger than it did a year ago. (Reuters—USD trend, Glassnode.) (reuters.com)
• For builders, the latest Bitcoin Core improvements reduce confirmation and fee‑bumping edge cases, especially for wallets and exchanges—good reasons to keep clients current with node software and to test against v28’s policy rules. (Bitcoin Core 28.0.) (bitcoin.org)
• For everyday users, self‑custody remains non‑negotiable. Hardware wallets protect private keys offline and are the cleanest way to benefit from any upside that macro or regulation delivers without counterparty risk. If you want a device that aligns with this moment—open‑source firmware, secure element, PSBT/Taproot support, and a smooth UX—OneKey is designed with those principles in mind. It’s a practical way to hold BTC while policy and markets do their dance.

Bottom line Bitcoin is caught between persistent overhead supply and improving macro‑policy tailwinds. With rates lower, the dollar softer, and regulation clearer, the market may be one catalyst away from escape velocity. Whether that spark arrives via a decisive DXY breakdown, an FOMC pivot, or a renewed ETF wave, the foundation is firmer than it’s been in years—exactly the backdrop long‑term allocators have been waiting for. (Federal Reserve, Reuters, Congress.gov.) (federalreserve.gov)

Keywords: protocol_upgrade, regulation