The Federal Reserve lowered interest rates by 25 basis points at its meeting on December 10, as the market expected, adjusting the target range for the federal funds rate to 3.5%-3.75%. This is the third rate cut this year (following 50 basis points in September and 25 basis points in October), aimed at addressing the slowdown in the labor market and inflationary pressures. However, Powell's statements at the press conference were relatively cautious, emphasizing that the future path of rate cuts depends on data. The dot plot indicates only one expected rate cut in 2026 (instead of the previously anticipated 2-3 times), which is seen as a "hawkish cut," leading the market to preemptively digest the positive news, resulting in "selling the fact."
Expectations have materialized: The market had priced in a 89%-90% probability of a rate cut well before the meeting, with BTC rebounding from a low of $80,000 at the end of November to $94,000, partially digesting the positive news. After the rate cut materialized, the lack of additional surprises led to profit-taking.
Powell's hawkish signals: He reiterated that "the December rate cut is not a certainty" and highlighted the risks of rising inflation (current core PCE around 2.5%-3%), which weakened the intensity of the easing expectations for 2026. The crypto market is sensitive to liquidity, and this "tightening signal" amplified selling pressure.
Historical patterns repeat: Similar to the rate cuts in September and October 2025, BTC experienced a 8%-12% correction. The current hourly chart shows a bullish structure with higher lows and highs, but if it breaks the support at $91,700, it may retest $89,700.
External factors: U.S. Treasury yields briefly rose (10-year reached 4.2%), the dollar index stabilized, along with a broad decline in altcoins (ETH -4%, SOL -6%), leading to reduced risk appetite.
