Bitcoin rallied towards $95,000 in the hours before the Federal Reserve Board meeting on December 18th, but retreated back to the $92,000 area amidst Chairman Jerome Powell's confirmation of a bearish mixed stance heading into 2026 and uncertain on-chain structure.
The Fed cut rates by a quarter as expected, bringing the target range to 4.25% to 4.50%, but Chairman Jerome Powell reminded markets in a press conference that policy is now in a “plausible neutral range” and that the committee is “well positioned to monitor the course of the economy.”
Bitcoin sustained much of its December 9 rebound, but failed to regain higher ground. The macro explanation is simple. The Fed delivered the rate cuts that markets had expected, but refused to test for a faster easing cycle in 2026.
The on-chain story reveals why Bitcoin lacks the internal strength to turn its relief into a sustained rally.
As reported by Glassnode, Bitcoin entered this week confined within a structurally weak range capped by a short-term holder cost standard of $102,700 and a true market average of $81,300.
Although prices have stabilized slightly above the true market average, the mechanisms underlying that stability tell a dark story.
Unrealized losses continue to grow, realized losses have risen to their highest levels since the FTX collapse, and spending by long-term investors remains high.
Markets operate in a system where time works against holders, making unrealized losses less likely to be tolerated and increasing the likelihood that those losses will be realized into some price strength.
Relative unrealized losses, measured as a 30-day simple moving average, rose to 4.4% from nearly two years spent below 2%.
This change marks a transition from a stage of euphoria to a stage defined by stress and hesitation. More specifically, even as Bitcoin has recovered from its November 22nd lows to the $92,000 zone, entity-adjusted realized losses have reached $555 million per day.
The top buyers have given in to the strength rather than sustaining the recovery, and this pattern of behavior is locking up attempts to move higher and preventing clean momentum from building.
Fed's 2026 guidance removes macro tailwinds
The December cut was never the real issue. While markets were bracing for what Powell's 2026 guidance would be, a summary of economic forecasts provided a clear answer.
The median for 2026 is about unchanged from September, with only one 25 basis point rate cut next year, and the neutral long-term forecast points to around 3%.
This result is consistent with concerns before the meeting that the Fed would not open the door to a more aggressive path despite implementing token cuts in December.
Chairman Powell's words reinforced that sense of caution. He warned that inflation “remains moderately high,” that near-term risks to inflation are tilted to the upside, and that “everyone at the table agrees that inflation is too high.”
He said the commission's twin goals of price stability and maximum employment were “somewhat tense” and that “there is no risk-free policy path.”
In response to a question about the January meeting, Powell said the Fed had not yet made a decision and “some people feel we should stop here and wait.” This may mean that markets should not expect smooth and predictable reduction cycles.
The Fed also announced it would begin buying $40 billion in Treasury bills over the next 30 days starting Dec. 12, but the pace could increase over the next few months.
Chairman Powell clearly rejected this bullish interpretation and framed the purchases as reserve management that “has no effect on the stance of monetary policy.” These are operational purchases to manage reserve levels and are not a new quantitative easing program.
Markets treating this as a dovish catalyst are misreading the signals.
Demand is weak across spot, futures and ETF flows
Macro context removes one tailwind, while on-chain and off-chain demand conditions remove another.
US Bitcoin ETFs had another quiet week, with the three-day average of net flows consistently staying below zero.
This extends the cooling trend that began in late November and marks a clear departure from the solid inflow regime that supported price increases at the beginning of the year.
Redemptions have remained stable for several major issuers, and institutional allocators are becoming more risk-averse.
Spot markets are now operating with thinner demand buffers, reducing immediate support on the buy side and making prices more vulnerable to macro catalysts and volatility shocks.
Trading activity has weakened from November to December, with spot relative volume near the lower end of the 30-day range.
The reduction in volume reflects defensive positioning, reducing liquidity-driven flows available to absorb volatility or maintain directional movement.
In futures markets, appetite for leverage is limited because open interest cannot be meaningfully restructured and funding rates are locked near neutral.
This week's funding remained near zero and turned slightly negative, highlighting the continued pullback of speculative long positions.
With derivatives activity subdued, price discovery leans toward spot flows and macro catalysts rather than speculative expansion.
Long-term holders take profits on rebound
Realized losses by top buyers only tell half the story. Long-term holders, those who have held the coin for more than a year, increased their realized gains to more than $1 billion per day during the recent rally, hitting an all-time high of more than $1.3 billion.
A combination of recent time-struck capitulation by buyers and heavy profit-taking by experienced investors explains why the market was unable to sustain the push to $95,000 and retreated back to the $92,000 zone.
The key cap threshold for recovery remains the 0.75 cost basis quantile of $95,000, followed by the short-term holder's cost basis of $102,700.
However, despite this selling pressure, prices have remained stable above the true market average, indicating sustained and patient demand absorbing the distribution.
If sellers begin to dry up, this potential buying pressure could prompt a retry at the 0.75 cost basis quantile, and potentially the cost basis for short-term holders.
The question is whether that demand can materialize before time stress forces holders caught high into further capitulation.
The options market reflects a similar cautious position. Short-term implied volatility spiked ahead of the FOMC meeting, with the one-week 20 delta call gaining about 10 volatility points, while the longer-term one was flat.
The 25 delta skew rose to around 11% over the one-week period, indicating a clear increase in demand for short-term downside insurance.
Weekly flow data shows that premium purchases dominate overall notional flows, with puts having a slight lead.
Traders buy volatility rather than sell it, reflecting hedging and convexity-seeking behavior rather than directional speculation.
The real test will be in January.
At the Fed's January meeting, it will become clear whether the December interest rate cut will be its last move for a while or the beginning of a gradual easing.
Powell's comments that the committee will have “a lot of data by January” and are viewing that data with “skepticism” set a high bar for further rate cuts.
Bitcoin's retreat from the $95,000 to $92,000 zone is not due to weak demand specific to cryptocurrencies.
It's about the Fed removing the macro tailwinds that encourage a clean breakout, while on-chain data reveals a market structure that is too weak to generate momentum on its own.
On the positive side, Bitcoin did not fully recover from the December 9 rally. The downside is that the next up leg will require either a dovish surprise from the Fed or a reset of on-chain dynamics where realized losses start to decline and long-term holders exit distributions.
Until then, Bitcoin will trade within a range defined by patient institutional demand absorbing distribution from earlier cohorts, with the true market average serving as the most likely bottom formation zone and the 0.75 cost-based quantile of $95,000 serving as the immediate resistance line.
The market is structurally weak, the macro environment is neutral at best, and time works against holders who enter at high levels.
