The Federal Open Market Committee (FOMC) begins its December session of 2025 today. Meanwhile, the committee will announce its decision on interest rates tomorrow, December 10, at 2:00 PM Eastern Time.
Investors and traders are closely watching whether the central bank will continue its easing cycle or surprise the market by maintaining rates. This is the last political message of the year, so it has significant implications for the near future of the cryptocurrency market.
Rate cut scenario: The Fed will cut by 25 basis points in December
The closer to the announcement, the more the market expects a cut in interest rates. A move down of 25 basis points is the most likely. CME FedWatch data shows that traders assign a 89.4% chance of a quarter-point cut during the meeting on December 10.
In comparison, only about 10.6% of market participants believe that the Fed will maintain rates in the range of 3.75%–4.00%.
If the Fed decides to cut, it will be the third cut in a row this year, following changes in September and October. Interest rates will drop to the level of 3.50%–3.75%.
The September cut triggered a brief rise in the crypto market, and Bitcoin and Ethereum gained in value. At the same time, the U.S. dollar weakened to its lowest level since early 2022.
However, the broader sell-off in the market limited the impact of the October cut. In December, volatility remains high, and the market reacts sharply in both directions.
Many analysts believe that another cut at this moment is likely to be 'bullish' for the cryptocurrency market. One analyst said:
If you think this isn't bullish for Bitcoin and risky assets, then you're not paying attention. Prepare for volatility. Prepare for green candles.
For cryptocurrencies, such a standard correction is moderately bullish – it raises liquidity and encourages investment in risky assets like Bitcoin or Ethereum. However, Crypto Rover emphasizes that the market has already priced in this scenario, and the announcement itself will not trigger a large reaction.
The analyst claims that the real driver for the market will be Powell's press conference, not the rate cut itself.
Bank of America expects that Powell will suggest 'reserve management purchases,' meaning new liquidity injections to stabilize funding for small banks. This will help normalize SOFR and support liquidity across the market. If Powell sounds dovish and says that inflation is weakening, tariffs have not affected the trend, and the labor market is weakening, the markets will get the green light for further cuts. However, if he sounds hawkish, like during the last FOMC meeting, Bitcoin and altcoins will experience a decline.
Meanwhile, some investors are even counting on a more aggressive cut of 50 basis points.
Such a decision would be a strong signal and would quickly increase liquidity, and the dollar would weaken even further. The chance of this scenario is low, but it would likely have a stronger, positive impact on the cryptocurrency market.
Scenario without a rate cut: No cuts may harm sentiment in the crypto market.
Few analysts predict this, but maintaining interest rates cannot be ruled out. The decision is made in an environment of distorted economic indicators. The U.S. government shutdown has prevented the publication of key data by the Bureau of Labor Statistics. Due to this lack of data, the Fed is currently operating almost in the dark. Jerome Powell, the Fed chair, said in October:
What do you do when driving in the fog? You slow down.
The Fed itself remains divided. Powell noted that policymakers feel pressure from both sides of the central bank's mandate. After the recent rate cut, the chair dampened hopes for further easing in December:
There have been very different opinions regarding the December decision. Another rate reduction in December is by no means a foregone conclusion; quite the opposite.
In such a case, the crypto market may react negatively in the short term. Maintaining rates will temporarily worsen sentiment and delay the bullish momentum that a cut could provide.
Despite the risks, long-term trends may still favor the cryptocurrency market. According to reports, the Fed plans to buy $45 billion in Treasury bonds per month starting in January 2026. Such a policy will increase liquidity in the financial system and may encourage investment in risky assets.
This will introduce enormous liquidity into the markets. This means only one thing: the quantitative easing program is back. However, this time they won't call it quantitative easing.
Regardless of whether the Fed announces the expected cut of 25 basis points, surprises with a larger reduction, or maintains rates, the decision will trigger significant fluctuations in the cryptocurrency markets. The press conference and further guidance from Chair Powell will be crucial, as investors will focus on future policy plans.
To check out the latest cryptocurrency market analysis from BeInCrypto, click here.
