Summary While I remain confident in Bitcoin’s long-term growth story, I argue that the coin is already trending toward $30,000 in the near term. BTC could sell off immediately after the January FOMC meeting, or even sooner. By comparing BTC to changes in factors that influence real yield trajectories, I assert that BTC’s latest rally has been running on borrowed time since September. Regulatory optimism and one-off positive events may support BTC in the short run, but they are unlikely to alter the broader trajectory. This article concludes a three-part BTC series examining dominance trends, money supply dynamics, and real yields—all of which collectively, and independently, point towards a BTC bear phase. Recently, Cathie Wood’s ARK Investment Management increased exposure to Bitcoin ( BTC-USD ), which could be seen as an indication that the coin may rally further. While I believe in BTC’s long-term growth prospects, in line with Ms. Wood's target of $650,000 to $1.5M by 2030 , I don’t believe her recent BTC and related portfolio additions were to benefit from a short-term rally because my analysis of dominance numbers and money supply in previous articles indicated otherwise. Below is a summary of those two articles, which you may skip and move to the next section if you’ve been following my work. On December 18, 2025, my article titled “ Exit 200%+ Yield MSTY - And Don't Look Back ” argued that dominance numbers are signaling a crypto risk-off sentiment. Precisely, the dominance of BTC hasn’t changed since early November, whereas the dominance of altcoins has diminished. In that timeframe, though, stablecoin's dominance has shot up, indicating that many investors now prefer holding cash over crypto. Then, my article titled “ IBIT: The Risk Of Bitcoin's Decline To $30K ,” published on December 22, 2025, established that there’s a strong correlation between expected money supply changes and BTC. I advocated that the Fed may not embark on any meaningful quantitative easing in the coming years. In the absence of such M2 tailwinds, investors will likely rotate out of crypto. More Evidence In my view, those two articles should’ve been enough for readers to reconsider their BTC positions, especially if their entry price was more than $30,000—my price target. Even still, I’ll provide further evidence to support my assertion that BTC is headed south. To that end, please consider the chart below, which plots BTC prices against changes in real yields (referred to as RYC going forward). BTC-USD vs. 10-Year TIPS YoY % Change (Weekly, Sep 2014 – Dec 2025) (Author's Work - Data from Yahoo and FRED) From a surface-level view, the inverse relationship between BTC and RYC is quite evident: when RYC falls, BTC rallies, and vice versa. Also, BTC rallies usually lag RYCs. That inverse relationship exists because BTC is a non-yielding asset, and when yields are expected to rise, the opportunity cost of holding non-yielding assets goes up, diminishing their attractiveness. The pertinent question then is: what drives RYC? Below is a quick rundown of every RYC directional pivot since the pandemic: RYC collapsed at the start of the pandemic due to the Fed’s zero rates and QE-until-necessary policies in response to the looming threat of a severe pandemic-induced recession and deflation. RYC started accelerating in early 2021, driven by rate hike expectations, which in turn were driven by inflation and growth expectations that had risen based on the possibility of vaccine rollouts. Inflation peaked in mid-2022, indicating that the Fed was approaching terminal rates. An expectation that gained further credence when the yield curve inverted in October 2022 , raising fears of an imminent recession. Consequently, RYC commenced a downward leg at the end of 2022, even though the Fed continued to hike rates until July 2023, because changes in both inflation and GDP trended downward. Inflation reached a point of stabilization at the start of 2024, when it fell to ~2.6%, quite close to the Fed's target—an event coupled with a flattening of the GDP change curve as well. But GDP had softened more than anticipated, raising fears and expectations of a weak economy, causing RYC to dive deeper. To manage that adverse situation, the Fed cut rates by 50 bps on September 18, 2024, and then delivered two more cuts in the same year. RYC changed direction in October 2024—when the market ascertained that the economy would be stable and GDP growth would normalize after the Fed's actions. Finally, RYC pivoted downward slightly at the end of 2024 when market participants believed the economy had digested the stimulatory effects of rate cuts. With all that information presented in this section, it is safe to assert that changes in expectations of long-term inflation and growth are among the primary drivers of RYC trajectories and thus, BTC cycles. Important Nuance Note that I have used the words “RYC trajectories” and “expectations of long-term inflation and growth” intentionally because trajectories and expectations are what matter, rather than singular events. If this nuance isn’t taken into consideration, investors may enter or exit positions at inopportune times. One such inopportune time was when rates were cut in October 2025, leading to only a slight drop in RYC but a big drawdown in BTC ($110,000 to roughly $85,000), i.e., the inverse relation between the two didn’t hold. That decoupling occurred because there were no changes in expectations of inflation and/or growth. Plus, Powell said that another rate cut in December is not a “foregone conclusion,” indicating a possible end to the rate cut cycle of 2025 and a stable economy going forward. In fact, it can be said that BTC’s long-haul price rally has been living on borrowed time since the September FOMC meeting, when Powell mentioned that cuts going forward would be more of a risk management initiative because the summary of economic projections hasn’t changed much (reference: Quote 1 in the appendix). Fed’s Path Forward Historically, the Fed has implemented insurance cuts multiple times, totaling 75 bps in all cases. (Source for rate cuts history: Federal Funds Rate History 1990 to 2026 ). In 2019, to manage the adverse effects of a possible trade war between the U.S. and China. In 2002, to further stimulate anemic economic recovery following the Dot-Com crisis. In 1998, to manage risks arising from the Asian Currency Crisis and the collapse of LTCM. In 1995, to stimulate a stagnant and weaker-than-expected labor market. Rates have already been cut by 75 bps since September 2025, which is why it's reasonable to assume that the Fed Funds rate won't change for the foreseeable future. An assertion further supported by the Fed’s latest economic projections , indicating a 2.4% PCE inflation, a GDP growth rate of 2.3%, and a Fed Funds rate of 3.4% for 2026. Moreover, Powell's statements from the October and December FOMC press conferences clearly indicate that if it weren’t for tariffs, inflation would be very close to the Fed’s target of 2% (reference: Quotes 2 and 3 in the appendix). Finally, he has said many times, and something I discussed in an article here , that tariff-induced inflation is a one-off event whose detrimental effects diminish over time. In summary, inflation is projected to subside in the coming months, GDP is projected to grow, and the Fed has delivered most of its rate cuts. Thus, RYC won’t experience any dramatic trajectory changes. Conclusion In my article on the iShares Bitcoin Trust ETF ( IBIT ) referenced/linked earlier, I stated that BTC will bottom between $30,000 and $20,000. To reach that level, however, it’ll experience multiple dramatic drawdowns. As mentioned before, I believe that BTC’s last strong sell-off, which caused it to drop from around $110,000 to roughly $85,000 within weeks, occurred because of normalization of growth and inflation, even though a rate cut was delivered. Therefore, I expect another drawdown, causing BTC to drop to its next resistance level of around $60,000, to occur after the next Fed meeting when an end to the current rate-cut cycle is officially announced—eliminating any doubts about the economy deteriorating further. Could the drop happen earlier? Yes, it depends on the payroll numbers and is quite tricky to understand. In my opinion, market participants, as of now, are quite convinced that there won't be any further rate cuts. But there's also some lingering doubt left along the lines of “What if things get worse in the labor market?” If, however, payroll numbers for December were to present a positive surprise, those doubts would be decisively eliminated, along with doubts about the end of the rate cuts cycle. In such a scenario, BTC may crash before the next FOMC meeting. The primary risk to my thesis is what I’ve already stated in other articles: singular events, such as regulatory changes and institutional participation, serving as tailwinds for BTC. I’d, however, like to further qualify that assertion by adding that such changes may only lead to ephemeral BTC rallies because its long-haul use as an extreme inflation hedge would be irrelevant in the coming economic environment. Lastly, it goes without saying that this ‘strong sell’ recommendation is not only for BTC but also for ETFs derived from it, such as the ProShares Bitcoin ETF ( BITO ), Fidelity Wise Origin Bitcoin Fund ( FBTC ), and Grayscale Bitcoin Trust ( GBTC ), or corporations that are directly correlated to BTC prices, such as Strategy ( MSTR ). Appendix: Quotes From FOMC Press Conferences Quote 1: September press conference (pages 6 and 7): Yeah, I think you could think of this, in a way, as a risk-management cut, because if you look at the SEP, actually the projections for growth this year and next actually ticked up just a little bit and inflation and unemployment didn’t really move. So what’s different now? What’s different now is that you see a very different picture of the risks to the labor market. You’ve seen—you know, we were looking at 150,000 jobs a month at the time of the last meeting, and now we see the revisions and we see the new numbers. And I didn’t—I don’t want to put too much emphasis on payroll job creation, but it’s just one of the things that suggests that the labor market is really cooling off. And that tells you that it’s time to take that into account in our, you know, in our policy. Quote 2: October press conference (page 11): One is that inflation away from tariffs is actually not so far from our 2 percent goal. We estimate—people have different estimates of what that is, but it might be five- or six-tenths, and so if it’s 2.8, then core PCE, not including tariffs, might be 2.3 or 2.4, in that range, something like that. Quote 3: December press conference (page 23): And I think the evidence is kind of growing that what's happening here is services inflation coming down and that's offset by increases in goods, and that goods inflation is entirely in sectors where there are tariffs. So that does build on the story. And, so far, it's only a story that this is -- that the goods inflation, which is really the source of the excess at this point, that that -- almost more than half the source of the excess inflation is goods -- is tariffs.
