FOMC Meeting Outlook: After Interest Rate Cuts, Where Does BTC Head?
On December 11, Beijing time (Thursday) at 3:00 AM, the Federal Reserve will announce the decision from the December FOMC meeting, followed by a press conference by Powell at 3:30 AM. The market widely expects the Federal Reserve to cut rates by 25 basis points, with a probability of 87%-96.9%, lowering the federal funds rate from the current range of 4.0%-4.25% to 3.75%-4.0%.
1. Rate Cut Expectations Fully Priced, Focus on Forward Guidance
The current market has nearly fully priced in a 25 basis point rate cut in December, so the direct impact of the cut itself on BTC prices may be limited. What is more crucial is Powell's statements at the press conference and the dot plot guidance for future interest rate paths. If the Federal Reserve signals a dovish stance, suggesting continued rate cuts in 2026, it may push BTC to break through the current consolidation range; conversely, if a hawkish signal is released, it may trigger a pullback.
2. Historical Performance Shows Increased Volatility Post-FOMC Meeting
Historically, Bitcoin prices tend to exhibit significant volatility during FOMC meetings. In the last 7 meetings, BTC prices rose in 5 instances, with the increases after the last three meetings exceeding 10%. However, it should be noted that the rate cut in December 2024 did not lead to a continued rise in BTC, instead retracting after peaking at $108,000.
3. Improved Liquidity Environment Benefits Risk Assets
Rate cuts will improve the global liquidity environment, and a weaker dollar typically benefits risk assets like Bitcoin. Low interest rates reduce the opportunity cost of holding non-yielding assets, potentially stimulating speculative capital inflows into the cryptocurrency market. Additionally, the Federal Reserve may announce a resumption of balance sheet expansion starting January 2026, further increasing market liquidity.
4. Short-Term Volatility Risks Cannot Be Ignored
Despite strong expectations for rate cuts, there are significant internal disagreements within the Fed, with some hawkish members explicitly opposing a rate cut in December. If the meeting results are less dovish than expected, or if Powell signals a hawkish stance at the press conference, it could trigger severe market volatility. Furthermore, the current market sentiment index is in the "fear" range (21), indicating that investor sentiment remains cautious.
