The Federal Reserve is in chaos, geopolitical tensions suddenly ease, and global markets stand at a crossroads.
As the year draws to a close, a time that is typically quiet for market trading, this week unexpectedly became a 'macro bomb' disarmament week! As a cryptocurrency analyst closely monitoring the macro situation, I deeply feel that every piece of news is enough to make the market tremble.
Severe internal divisions have emerged within the Federal Reserve early this morning, casting a shadow over the monetary policy path for 2026, which presents an ultimate test for the cryptocurrency market ahead of the Christmas holiday.
01 The internal divisions of the Federal Reserve have intensified
This may be the most challenging moment at the end of Powell's term. Last week, the Federal Reserve implemented its third interest rate cut of the year, lowering rates to the 3.50%-3.75% range, but the meeting results revealed unprecedented internal divisions.
At the meeting, three committee members voted against, marking the highest number since September 2019. More dramatically, the opposition is divided into two factions: Federal Reserve Governor Milan advocates for an aggressive 50 basis points cut, while the other two members believe that rates should not be cut.
This divergence directly leads to confusion in the market's expectations for the rate cut path in 2026. Currently, major investment banks have vastly different predictions: Goldman Sachs and Morgan Stanley predict a 50 basis points cut in 2026; Citigroup expects a 75 basis points cut; while HSBC and Standard Chartered believe the Federal Reserve will not cut rates at all throughout the year.
Federal Reserve Chairman Powell also had to admit that current interest rates are in a 'broad neutral rate estimation range,' and the Fed can now 'wait and see how the economic situation develops.' This ambiguous statement suggests that the Fed may enter a period of observation.
02 Geopolitical risks have suddenly cooled
Just as the market focuses on the Federal Reserve, unexpected progress emerges in the geopolitical arena. Last weekend, there was a significant breakthrough in negotiations over the Ukraine issue, with Ukraine signaling a key position of 'abandoning NATO membership'.
This development immediately triggered a market reaction. U.S. President Trump has confirmed this optimistic progress and stated that the distance to reach an agreement promoting peace between Russia and Ukraine is 'closer than ever'.
The easing of geopolitical risks directly affects market risk-averse sentiment and may temporarily weaken the attractiveness of traditional safe-haven assets like gold. Notably, recent gold prices have experienced a rise and fall around $4,350, partly due to the repricing of geopolitical risks.
03 Key economic data released intensively
As geopolitical factors temporarily take a backseat, market attention quickly shifts to fundamentals. This week, key economic data will be released in succession, directly impacting the market's pricing of the Federal Reserve's rate cut path in 2026.
The most closely watched are the October and November non-farm payroll data, which were delayed due to the government shutdown and will be released together. The dual non-farm data being published simultaneously is likely to significantly reshape the market's judgment on the resilience of the U.S. economy.
At the same time, retail sales data, initial PMI values, and U.S. CPI inflation data will be released sequentially. Any of these data points exceeding expectations could cause the market's expectations for rate cuts by the Federal Reserve to swing wildly again.
What is the impact on the cryptocurrency market?
Facing these three 'macro bombs', the cryptocurrency market undoubtedly stands at a crossroads. The struggle for Bitcoin around the $90,000 mark will become more intense.
Changes in Federal Reserve personnel may be the biggest variable. Trump has been reported to consider replacing the Fed Chair at the beginning of the year, with the current favorite, Hassett, leading with a 54% betting probability. History shows that changes in the Fed leadership often come with a repositioning of the policy path.
If geopolitical risks substantively cool, it may temporarily weaken Bitcoin's safe-haven buying power, but peace will always favor economic development and market stability in the long run.
The most direct impact of the data-intensive release week is increased volatility. Against the backdrop of thin liquidity during the Christmas holidays, any unexpected news could be amplified.
Response strategy: focus on stability and maintain sharpness
In the face of a highly uncertain market environment, I believe there is only one word for strategy: stability.
Avoiding high-leverage operations is key, as volatility may rise sharply. Closely monitor the market's immediate reaction after data releases, especially the performance of the dollar and U.S. stocks, as they usually have a correlated effect with the cryptocurrency market.
If the market experiences fluctuations, funds may quickly rotate between mainstream coins and altcoins. Stay patient and observe; once the market digests this series of significant news, the direction will become clearer.
Every drastic change in the macro environment is the ultimate test of the blockchain concept. True value projects will show resilience amid volatility, while pure speculation will reveal its true form.
The market always swings between greed and fear, and in the coming week, these two emotions will be amplified to the extreme. Stay calm, stay flexible, and we shall see.
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