Four keys for Bitcoin to bounce back to $112K: From monetary policy to hedging opportunities

Points of View:

• The Bitcoin market is currently at $90.31K, down 0.04% over 30 days, but signs of recovery are emerging from improved liquidity and changing expectations regarding interest rate policies.
• Four factors will determine the pace of recovery: Fed’s monetary guidance, bank regulation adjustment moves, MSCI’s decision on BTC-accumulating companies, and derivatives market sentiment.

Bitcoin has just gone through a prolonged correction phase, but positive signals from market liquidity and expectations of monetary easing are opening new opportunities. The TIPS ETF Association (U.S. Treasury Inflation-Protected Securities) has retested support at 110.50, indicating a high probability (78%) that the Fed will keep rates at 3.50% or higher until the end of January.

Monetary Policy: From Tightening to Easing?

Uncertainty about inflation is putting short-term pressure on the market. Employment reports and core PCE index expected to be released mid and late December will be key points. However, a structural change could occur sooner: Fed Chair Powell’s term ends in May, and President Trump has clearly expressed a preference for a candidate with more flexible monetary thinking.

This matters for Bitcoin because: a more dovish Fed often boosts demand for inflation-hedging assets. The Trump administration has also signaled plans to stimulate growth through increased government spending, a historical context that has always been favorable for Bitcoin and other risk assets.

Banking Regulations: The Catalyst for Risk?

Bloomberg reports that U.S. regulators have finalized rules to reduce capital requirements for the largest banks, effective from January 1, 2026. This easing could create positive sentiment for risk assets, including Bitcoin, as liquidity increases and risk appetite is elevated.

MSCI and the Macro Financial Outlook

Another variable comes from MSCI’s decision on January 15 whether to exclude companies focused on Bitcoin accumulation. Index funds linked to MSTR currently hold nearly $9 billion in market exposure. If MSCI does not exclude these companies, it will enhance Bitcoin’s appeal to passive investors and mainstream index funds.

Bitcoin Derivatives and Trader Sentiment

The state of Bitcoin options markets provides a window into current sentiment. The 30-day put-call skew is currently at 10%, indicating traders are seeking downside protection. With options expiry totaling $22.6 billion, traders will need to see this skew drop to neutral (5% or lower) before regaining full confidence and pushing the price toward $112K.

When Could Bitcoin Break the $112K Barrier?

The path to $112K is still feasible but may take longer than expected. The combination of: (1) Fed’s monetary easing, (2) lower bank capital requirements, (3) MSCI not excluding BTC-accumulating companies, and (4) improved derivatives sentiment — will be the necessary catalysts. These factors are expected to converge in the first half of 2026, opening opportunities for a more sustained rally after the current correction phase.