Bitcoin Targets $94K as Vanguard’s Crypto Reversal and Fed Cut Hopes Fuel Bullish Momentum
Key Takeaways:
- Bitcoin is on its way to $94,000 as growing institutional demand and a potential rate cut by the U.S. Federal Reserve are boosting market sentiment.
- The move up was supported by a wipeout of excess leverage at $93,000 and forced buying during last week’s drawdown that saw BTC fall to the $80,000 range. This cycle saw the market attract $732 billion, which is more than double that of the previous two cycles.
- Vanguard’s decision to allow its 50 million clients to invest in regulated crypto products such as ETFs and mutual funds is viewed by analysts as a major bull signal for the broader market, as bitcoin trades 30% below its ATH.
- Markets have already priced in a potential December rate cut by the Federal Reserve. President Trump has named his economic advisor, Kevin Hassett, as a nominee for the Fed chair. Hassett is a pro-crypto candidate who previously served as an advisor for Coinbase.
Bitcoin (BTC) is trading near $94,000 as institutional demand and a fresh short squeeze continue to boost broader market sentiment ahead of next week’s U.S. Federal Reserve meeting.
The flagship crypto recorded a trading volume of $81 billion in the past 24 hours, with its price up 3% on the day, sitting just 1% below today’s high of $93,929 and about 3% above the weekly low near $90,837.
BTC Upward Momentum: $94K Short-Squeeze Removes Excess Leverage
According to data from The Block, bitcoin’s price has jumped roughly 8% since Monday’s lows to trade at its highest level in two weeks. Analysts suggest that this move has been driven in part by forced buying as overleveraged shorts were squeezed out above $93,000.
BRN head of research Timothy Misir noted that exchange orders are now showing dense liquidity clusters around that price point. He also noted that BTC has attracted roughly $732 billion in new capital this cycle, which is more than double the amount seen during the previous cycle, from 2020 to 2022.
U.S.-listed bitcoin spot ETFs also provided additional tailwind to the price, with the eleven investment vehicles recording about $58.5 million in net inflows on Tuesday. BlackRock’s iShares Bitcoin Trust ETF (IBIT) accounted for most of that total, attracting $42.24 million. This marked a fifth consecutive day of positive flows for the funds.
Vanguard and Bank of America Clients Jump Into Crypto Dip-Buying
However, it was a major crypto naysayer’s reversal that became the biggest institutional bullish tide signal of the day. Vanguard, the $11 trillion asset manager, has announced that it will allow brokerage customers to trade regulated ETFs and mutual funds tied to BTC, ETH, XRP, SOL, litecoin (LTC), and hedera (HBAR).
The company’s decision followed months of internal evaluation that revealed strong investor demand for digital assets even during bear market periods, and the approval of crypto investment products in the United States.
Prominent financial advisor and commentator Ric Edelman’s statements on X shed light on the significance of the Wall Street behemoth reversing its long-standing opposition to bitcoin and other crypto assets.
He thanked Vanguard’s new CEO, Salim Ramji, for allowing clients to buy bitcoin ETFs, calling the former global head of BlackRock’s iShares and Index Investments far more “level-headed” than his predecessor, Tim Buckley.
At BlackRock, Ramji was responsible for managing a majority of the company’s client assets and overseeing the expansion of the iShares platform to provide innovative, low-cost investment products globally, including IBIT – the world’s largest spot bitcoin ETF by net assets and trading volume.
Edelman said Vanguard timed its move perfectly, as the asset manager is making bitcoin, ethereum, XRP, and solana ETFs available to its 50 million customers when prices are trading 30% below their all-time highs. He noted that if Vanguard clients can buy the dip, then they will find themselves sitting on “nice profits” in the near future. The analyst added that it is “impossible” to view this as anything other than highly bullish for BTC and other major crypto assets.
Despite allowing crypto funds to trade on its brokerage platform, Vanguard reiterated that it won’t launch its own crypto product. This approach enables the firm to address current investment trends while maintaining its conservative, risk-focused reputation.
Meanwhile, Bank of America, the second-largest bank in the U.S. by total assets, reportedly issued internal guidance directing its wealth management clients to add crypto exposure in their portfolios. The banking giant has called for a digital asset allocation of 1% to 4% for clients of Merrill, Bank of America Private Bank, and the Merrill Edge platforms.
The multinational investment bank also announced that starting January 5, its CIO will cover four spot bitcoin ETFs, including BlackRock’s IBIT, Fidelity’s Wise Origin Bitcoin Fund (FBTC), Grayscale’s Bitcoin Mini Trust (BTC), and Bitwise Bitcoin ETF (BITB).
These moves reflect the broader normalization of digital assets in traditional finance.
Fed Ends QT; Rate Cut Expected as Trump Taps Bassett for Chair
The cherry on top of this institutional catalyst cake is the U.S. Federal Reserve ending its Quantitative Tightening (QT) phase, with markets pricing in a December rate cut as nearly certain.
Since 2010, each time the central bank ended QT and started Quantitative Easing (QE), it coincided with major bitcoin rallies. This pattern includes the explosive 2013 cycle and the post-2019 surge that carried BTC to its 2021 all-time high of $69,000.
Futures markets now imply about a 90% chance of Fed chair Jerome Powell announcing a 25-basis-point cut next week. Prediction markets like Kalshi and Polymarket also showed similar probabilities.
However, the bigger story here is the future leadership at the central bank. Powell’s term is set to end in May 2026, and President Trump has named White House economic advisor and former Coinbase executive Kevin Hassett as a potential replacement. Hassett is viewed as a pro-crypto candidate, and his appointment, alongside upcoming Fed exits, is bullish for the market.
Meanwhile, bitcoin price briefly dipped below its Metcalfe-based fair value for the first time since 2023. Analysts suggest that this is a signal for a classic late-cycle market reset. The move came during last week’s sharp drawdown that saw BTC decline 36% toward $80,000, erasing excess leverage and flushing out speculative positions.
Historically, during periods when bitcoin trades below its network value, it has produced strong forward returns. According to CoinDesk, 12-month gains have averaged 132% with positive performance occurring 96% of the time. Long-term holders have accumulated roughly 50,000 BTC ($4.64 billion) over the past ten days, reversing months of steady selling.
At the time of writing, Bitcoin (BTC) is trading at $92,930 – down 0.95% in 24 hours.
Also Read: Bitcoin Price Prediction Today: Will the BTC Stabilize Around $94k-$97k Today?
Crypto & Blockchain Expert