The Federal Open Market Committee (FOMC) opens its December 2025 session today, with the decision scheduled to be announced tomorrow, December 10, at 2:00 PM ET.
Investors and traders are closely watching to see if the central bank will continue its easing cycle or surprise markets by keeping interest rates steady. As the last policy announcement of the year, the outcome will weigh heavily on crypto markets.
The rate cut scenario: What happens if the Fed delivers a 25 basis point cut in December
As the announcement approaches, market expectations are leaning heavily toward a rate cut, with a 25 basis point move seen as the most likely outcome. Data from CME FedWatch shows traders are attributing an 89.4% chance of a quarterly cut at the December 10 meeting.
In contrast, only around 10.6% of market participants believe that the Fed will keep interest rates at the current range of 3.75–4.00%.
If the Fed goes ahead with a cut, it would be the third in a row this year, following adjustments in September and October. This would lower the rate to 3.50-3.75%.
September's decline sparked a short-lived rally in the crypto market, with Bitcoin and Ethereum posting gains. Meanwhile, the US dollar fell to its weakest level since early 2022.
Despite this, the broader market decline dampened the impact of the October decline. Volatility remains high in December, with sharp swings in both directions.
Still, many analysts believe that another cut at this stage would likely be seen as “bullish” for crypto.
“If you think this isn’t positive for Bitcoin and venture capital, you’re not paying attention. Prepare for volatility. Prepare for green lights,” one analyst said.
For cryptocurrencies, such a standard adjustment is seen as slightly positive, as it increases liquidity and encourages investment in risky assets like Bitcoin and Ethereum. However, Crypto Rover explained that markets have already adjusted to that outcome, so the announcement itself is unlikely to provoke any major reaction.
According to the analyst, the real catalyst for market movements will be Powell's press conference, not the rate cut itself.
“Bank of America expects Powell to hint at ‘reserve management purchases,’ which means new liquidity injections to stabilize small banks’ funding stress. This would help normalize SOFR and support liquidity across markets. If Powell sounds dovish and says inflation is calming, tariffs have not changed the trend, and the labor force is softening, it will give markets the green light to expect more cuts. But if he sounds hawkish, like the last FOMC meeting, Bitcoin and alts will dump,” he commented.
At the same time, some investors are even expecting a more aggressive cut of 50 basis points.
This would be a strong monetary policy signal, leading to rapidly expanding liquidity and further weakening of the dollar. While the probability of this scenario is low, it would likely have a stronger positive impact on crypto markets.
The No-Rate-Cut Scenario: Why a Fed Stance Could Affect Crypto Sentiment
Although few analysts predict it, the possibility of the Fed holding interest rates steady cannot be ruled out. The rate decision comes against a backdrop of dismal economic indicators. The government shutdown halted key data releases from the Bureau of Labor Statistics. This shortfall has left Fed officials working with limited visibility.
“What do you do if you’re driving in the fog? You slow down,” Fed Chairman Jerome Powell said in October.
The Fed itself remains divided. Powell has noted that policymakers are under pressure from both sides of the central bank's mandate. After the latest rate cut, the chairman dampened hopes for further easing in December.
“There were strongly differing views on how to proceed in December. A further cut in the policy rate at the December meeting is not a given, far from it,” he said.
If this happens, crypto markets are likely to react negatively in the short term. A hold would temporarily weigh on sentiment and delay any positive momentum that a cut may have triggered.
Despite the risks, long-term trends could still benefit crypto markets. Reports say the Fed intends to buy $45 billion in Treasury bonds per month starting in January 2026. This policy could increase liquidity in the financial system and drive investment in risky assets.
“This would inject massive liquidity into the markets. It only means one thing: QE is coming back. But this time they won’t call it QE,” said Lark Davis.
Whether the Fed announces the widely expected 25 basis point cut, surprises with a larger cut, or leaves rates on hold, its decision is likely to cause significant volatility in crypto markets. The subsequent press conference and guidance from Chairman Powell will also play a key role as traders focus on the outlook for future policy.