The Federal Reserve's verdict about the rate circa December 10, 2025, is becoming more interesting with inflation and economic indicators soon to be less forceful, thus, the probability of a 25-basis-point rate reduction has shot up to 85%. If the Fed's cutting is on the soft side, then it would be right to trace a surging crypto market as a sign of rising liquidity and risk taken. On the contrary, if the Fed is going to shock the market with no change at all, then, troubles from $118M in Bitcoin (BTC) liquidations already occurring in the past day must be anticipated especially in liquidation.
Increasing the rate would probably lead to a depreciation of the US dollar, which would reposition cryptocurrency as an attractive inflation hedge. In most cases, lower interest rates have led to higher crypto values, but it is not a matter of certainty regarding the future. The market has already adjusted for a cut, thus a "sell-the-news" reaction is possible if the Fed's announcement is not accompanied by more.
Scenarios Possible:
Dovish Cut: Raises the value of cryptocurrencies, lowers the perception of risk, and gives liquidity
Hawkish Surprise: Causes liquidations and market's uncertainty
No Cut: A bearish impact on prices of crypto, selling pressure
It is beneficial to be attentive to Fed Chair Jerome Powell's manner, combined with the upcoming economic indicators as a way to determine the market's next step.
Comments your thoughts.
