According to Tracy Shuchart, Bitcoin’s climb from $40,000 to $126,000 was powered based on one dominant theory: a Federal Reserve easing cycle combined with a wave of institutional participation through spot ETFs.
Traders priced in a supportive macro backdrop where rate cuts were all but guaranteed, liquidity would expand, and institutions would steadily absorb supply. However, once the Federal Reserve reversed course, the foundation of that theory collapsed.
Expectations for December rate cuts fell from 90% to 40%. Real yields on short-term Treasuries stayed elevated above 5%, and the strong-dollar environment returned. With the macro assumption gone, Bitcoin’s valuation near all-time highs became difficult to justify.
“Now the market is repricing based on reality: high real yields, no Fed easing, strong dollar environment,” the analyst said.
