This message, although disclosed by insiders and in a stage of speculation, is not baseless. The Federal Reserve is the global central bank's main control, with the chairman managing the dollar interest rates and capital flows. With the new chairman taking office, especially one appointed by Trump, the direction of monetary policy may change. The timing in the first week of January puts the market into a policy vacuum filled with speculation, rumors, and uncertainty, leading large funds to act cautiously. In the following month, the market will be sensitive and restless around key issues such as who can decide on interest rate cuts and balance sheet reductions.
Among the potential candidates that Wall Street is hotly discussing, Kevin Hassett has a market prediction probability of about 54%. He is a former economic advisor to Trump, and is considered a dove, recently stating that inflation is below target and there is ample room for interest rate cuts. If he takes office, it may be short-term favorable for the stock market and cryptocurrency sector. Other academic or hawkish candidates like John Cochrane may dampen expectations for interest rate cuts. Before an official nomination, the market will speculate repeatedly among the candidates, and related news and rumors will lead to significant short-term fluctuations in the cryptocurrency sector.
This message explains the recent awkward phenomenon in the market: good news does not lead to price increases, as a greater ultimate test is yet to come, and small good news such as technical breakthroughs are overlooked; prices are stagnant, and do not drop significantly, as both bulls and bears are waiting for the candidate results. The biggest risk is the gap between expectations and reality; if the market's widely expected dovish Hassett does not take office, the market may panic and drop due to unmet expectations. From now until early January next year, the main focus of the market will shift from trading data to trading expectations, making the market more political and difficult to grasp with technical analysis.
Retail investor operation guide:
For heavy investors (especially those with high leverage or altcoins), the core action is to reduce leverage and decrease positions. In the coming month, volatility may be driven by sudden news, and high positions and leverage can lead to rapid losses. Use rebounds to reduce positions to below 50%, allowing yourself to feel at ease.
Empty or light positions
The core action is to hold cash tightly and never chase high prices. The real trend opportunity will come after the candidates are determined and the market digests new policy expectations. The previous rise may have been a pulse market, with doubts about its sustainability; cash should be used to buy certainty after the candidates are announced.
Discipline that everyone must follow
Stay away from contract leverage; policy market pinning is common, and leveraged accounts are easily targeted; watch more and act less, reduce the frequency of operations, and do not guess the truth or impact of rumors.
My personal plan
Keep positions below 30% as an observation position; retain over 70% cash to cope with uncertainty and seize opportunities after the situation clarifies. Shift attention from candlestick charts to mainstream financial media reports on the Federal Reserve Chair candidates to grasp changes in market expectations.
Summary
The combination of Trump and the Federal Reserve Chair is the biggest macro variable at the beginning of 2026, like low pressure before a storm, making people feel gloomy and restless, but when the storm will come and how strong it will be is unknown. In the coming month, retail investors will compete in the discipline of controlling positions and the patience to wait, reducing bets and staying at the table. Living longer is a hundred times more important than making more in the short term.
(Last reminder) When the market focuses on personnel changes in Washington, the real reversal signal might be elsewhere. The on-chain data I monitor shows key changes in the activity patterns of specific addresses, similar to the situation at the end of 2018. Specific details and strategies will be announced in the chat room below later.
