The Federal Reserve kicks off its critical policy meeting tomorrow, December 9, 2025. The market is pricing in an 87% probability of a rate cut, fueling a "Santa Claus Rally" narrative. Traders are anticipating that "Papa Powell" is about to gift the market the liquidity it craves.
A rate cut matters because it lowers the "Cost of Capital." Lower rates reduce yields on risk-free Treasuries, forcing capital further out on the risk curve into crypto. Additionally, a rate cut typically weakens the dollar (DXY), mathematically pushing up the price of Bitcoin.
A confirmed cut solidifies the macro backdrop for the 2026 bull run. It specifically benefits DeFi protocols, as on-chain yields become more attractive compared to falling traditional yields.
The trading floors are divided: is this "priced in," or will the confirmation trigger a squeeze?. Algorithms will trade off every word of Powell’s press conference regarding the 2026 outlook.
We are no longer speculating on if liquidity will return; the tightening cycle is officially over. Tomorrow's decision holds the key to global liquidity conditions.
