The Federal Open Market Committee (FOMC) will convene today for a meeting in December 2025. The decision announcement is scheduled to be made public tomorrow, December 10, at 2 PM.
Investors and traders are paying attention to whether the central bank will continue its additional easing cycle or surprise the market by keeping interest rates steady. As this is the last policy announcement of the year, the outcome will significantly impact the cryptocurrency market.
The likelihood of a 0.25% rate cut is the highest.
As the announcement approaches, the market is leaning towards a rate cut. A 25bp (0.25 percentage point) cut seems to be the most likely scenario. According to the Chicago Mercantile Exchange (CME) FedWatch data, traders assess the probability of a fourth-quarter point cut at 89.4% for the December 10 meeting.
On the other hand, only about 10.6% of market participants expect the Fed to maintain the 3.75% to 4.00% rate range.
If the Fed cuts rates, it will be the third consecutive cut after September and October this year. As a result, rates will be adjusted to the range of 3.50% to 3.75%.
During the September cut, Bitcoin and Ethereum showed an upward trend, while the US dollar fell to its lowest level since early 2022. See the status during that period.
Meanwhile, the impact of the October rate cut has been significantly weakened due to the overall market decline. See October situation. Volatility remains high in December, with prices fluctuating in both directions.
Many experts still believe that this additional cut is likely to be interpreted as 'bullish' for cryptocurrencies. See related explanations.
"If you think this decision won't be bullish for Bitcoin and risky assets, you are not seeing the situation correctly. Prepare for volatility. Get ready for a big upswing," an analyst said.
Such rate cuts in the cryptocurrency market are generally interpreted as increasing liquidity and promoting investment in risky assets, leading to a 'slight bullish' outlook. However, Crypto Rover explains that the market has already priced in this scenario, so there may not be significant volatility upon the actual announcement.
According to analysts, the key variable that will move the actual market will not be the rate cut itself but rather Chair Powell's press conference.
"Bank of America expects Chair Powell to imply 'purchases for reserve management purposes.' This means providing additional liquidity to alleviate funding pressures for small banks. This policy will help normalize SOFR and support overall market liquidity. If Powell is dovish and explains that inflation is easing, tariffs haven't impacted the trend, and the labor market has weakened, the market will gain momentum for further rate cut expectations. Conversely, if he makes hawkish comments like during the last FOMC meeting, Bitcoin and altcoins could decline," he stated.
Meanwhile, some investors are expecting a more aggressive policy of a 50bp (0.5 percentage point) cut. See related content.
Such strong policy signals could exacerbate dollar weakness alongside increased liquidity. While the probability is low, this could lead to a more significant positive effect on the cryptocurrency market. See related materials.
Fed holds rates steady... Cryptocurrency sentiment worsens?
Only a handful of experts predict, but the possibility that the Fed may hold rates steady cannot be completely ruled out. This rate decision comes at a time when key economic indicators have not been released properly. Due to the federal government shutdown, the Labor Statistics Bureau's key data releases have been halted. This lack of information means that Fed officials must make judgments based on limited data.
"What should we do if we are driving in fog? We need to slow down." Chair Jerome Powell mentioned this in October.
Internally, opinions at the Fed are divided. Chair Powell mentioned that policymakers are under pressure from both of the central bank's dual goals. Following the previous rate cut, Chair Powell made comments lowering expectations for additional easing in December.
"In December, there were strongly opposing views on what to do. It is by no means a given that an additional rate cut will be decided at the December meeting," he said.
In this case, the cryptocurrency market may show a bearish reaction in the short term. A hold could temporarily dampen market sentiment and delay the bullish momentum that a cut could have triggered.
Despite the risks, the long-term trend still seems favorable for the cryptocurrency market. According to reports, the Federal Reserve plans to purchase $45 billion in government bonds monthly starting January 2026. This policy could improve financial system liquidity and encourage investment in risky assets.
"This action will provide massive liquidity to the market. It only means one thing: quantitative easing (QE) is coming back. However, this time it will not be referred to as quantitative easing (QE)." - Lac Davis.
Whether the Fed announces the widely expected 0.25 percentage point rate cut, surprises the market with a larger cut, or holds rates steady, this decision is likely to trigger significant volatility in the cryptocurrency market. The ensuing press conference by Powell and future policy outlooks will also play a crucial role. Investors are focused on the future policy direction.
