Bitcoin’s Rally Hinges on a ‘Shadow Chair’ Bet and a Sinking Dollar

Why Bitcoin just sprang back (no, it wasn’t magic)

Short version: traders started pricing in a Fed rate cut in December, the U.S. dollar cooled off, yields steadied, and Bitcoin got its caffeine shot. After a volatile November that shook out leveraged bets and a string of outflows from U.S. spot BTC products, the market saw a neat rebound from the mid-$80Ks back toward the low $90Ks.

Think of it as classic liquidity theater: softer policy expectations loosen financial conditions, the dollar weakens, long-term yields sit around the 4% area, and risk assets perk up. Add some short-covering after a brutal month for risk, plus a few mechanical rebounds from ETF flows, and you get the snap higher in BTC prices.

The “shadow chair” effect — people betting on who might run the Fed

Here’s where the plot thickens: talk of who will run the Fed next time around is already nudging markets. The White House has signaled it will name a nominee early in 2026, months before the current chair’s term ends, and that has traders mapping how different possible nominees would tilt policy.

Different front-runners carry different vibes. Some are seen as more dovish and could push markets toward faster cuts and a softer dollar; others are viewed as more hawkish, likely keeping rates higher for longer. Even though any nominee can’t actually change votes until confirmed, the mere possibility changes expectations — and expectations change curves, currencies, and risk appetite.

For Bitcoin that means the rally today is primarily a rates-and-dollar story: if markets price in easier policy and the dollar slides further, BTC keeps its tailwind. If instead a hawkish surprise or an inflation bounce shows up, the dollar would firm, yields would rise, and crypto would likely take it on the chin. Keep an eye on official Fed probability signals, daily ETF flows, and any narrowing of the White House shortlist — those are the things that will tell you whether this is a real rotation or just a headline-fueled wiggle.

TL;DR: This bounce isn’t about personality cults — it’s about money moving in response to rate odds and dollar action. The Fed-chair chatter is the spicy garnish that amplifies the main dish: liquidity expectations. Sit tight, watch the flows and the dollar, and don’t bet the farm on headlines alone.