The Federal Reserve is in turmoil, geopolitical situations are changing suddenly, and economic data is piling up—it's like the market is on a wild roller coaster ride.
This week's macro events are so dense that they feel suffocating, like watching an exciting action blockbuster, but with our money at stake. The Federal Reserve is in disarray, geopolitical situations have suddenly shifted, and economic data is released in a flurry—each piece of news is enough to make the market shake.
As an analyst who has been navigating the crypto market for many years, I'll help you untangle this mess and see how we can protect our assets and find opportunities in this macro 'nuclear bomb' defusing battle.
01 The internal divisions of the Federal Reserve are now public, and the leadership may change hands.
This week, the biggest highlight is undoubtedly the complete public disclosure of the contradictions within the Federal Reserve. In the past, the Fed has always tried to maintain a facade of unity; this time, three officials actually cast dissenting votes in the interest rate decision, marking the first disagreement since 2019.
On one side, the council member Milan advocates for a more aggressive rate cut of 50 basis points; on the other side, Kansas City Fed President Schmid and Chicago Fed President Goolsbee argue for maintaining the status quo. This situation of 'doves feeling insufficient and hawks feeling excessive' clearly indicates a significant rift in the Federal Reserve's decision-making body regarding the core contradictions in the economy.
Even more stimulating is that Federal Reserve Chairman Powell's term will end in May 2026, and White House National Economic Council Director Hasset has become the most popular successor. As a staunch supporter of Trump's policies, Hasset has a dovish policy inclination and has previously publicly supported larger rate cuts.
The market is now wildly betting on 'dovish' Hasset; if he takes office, the Federal Reserve's policy independence will face severe challenges. Historical experience shows that excessive political interference in monetary policy may trigger bond market turmoil similar to the UK's 'Truss moment,' leading to rising long-term interest rates instead of decreases.
02 Geopolitical risks are cooling, and safe-haven assets are under test
Unexpected news has emerged regarding geopolitical issues, with reports of breakthroughs in the Russia-Ukraine negotiations. If geopolitical risks really do cool down, it may weaken the buying power of safe-haven assets like gold and Bitcoin in the short term.
Recently, gold and silver prices have reached historical highs, with gold rising more than 2% intraday and spot silver climbing over 3%. This reflects the market's pricing of risk factors. Once the risks dissipate, these assets may face corrective pressure.
However, in the long run, peace is always a good thing. The easing of geopolitical tensions is beneficial for global economic growth and ultimately supports risk assets. What the market needs to focus on are the specific details and implementation of any peace agreement, as past 'breakthroughs' have sometimes been fleeting.
03 Economic data is heavily clustered, and market volatility is likely to intensify
This week's economic data is a veritable 'family bucket' bombardment, with U.S. GDP, PCE inflation, and consumer confidence data all being released at once. Any one of these data points exceeding expectations could cause the market's interest rate cut expectations regarding the Federal Reserve to swing dramatically.
Data from the U.S. Department of Labor shows that in November, the CPI rose 2.7% year-on-year, while the core CPI increased 2.6% year-on-year. Additionally, non-farm payrolls increased by 64,000, better than expected, but the unemployment rate rose to 4.6%. This seemingly contradictory data further deepens the market's divisions.
Against the backdrop of incomplete information, the Federal Reserve still raised its economic growth forecast for 2026 to 2.3%, while slightly lowering inflation expectations, painting an optimistic picture of a 'soft landing.' However, this optimism stands in stark contrast to the fatigue evident in the job market.
Historical experience indicates that against the backdrop of reduced liquidity during the Christmas holidays, the impact of any significant news may be amplified. The market is like a tightly stretched rubber band that may snap at the slightest misstep.
04 Impact of the crypto market and response strategies
For the cryptocurrency market, these macro events signify heightened uncertainty, and volatility may intensify. The battle between bulls and bears around the $90,000 Bitcoin mark will become even fiercer.
The widening divergence in Federal Reserve policies has pressured dollar assets, which may prompt some funds to seek decentralized alternatives. While the cooling of geopolitical risks may temporarily reduce Bitcoin's safe-haven buying, in the long term, expectations of a shift in global liquidity still provide support.
My suggestion is:
Avoid high leverage. In an environment with increased volatility, high leverage is equivalent to suicide. The market may experience rapid two-way fluctuations, and any misjudgment in direction could lead to quick stop-loss exits.
Keep a close eye on the market's immediate reaction after data is released. What's important is how the market interprets the data, not the data itself. For example, even if the data is strong, if the market believes this won't change the Federal Reserve's dovish stance, risk assets may still rise.
Focus on opportunities for capital rotation. If the overall market is volatile, funds may rapidly rotate between mainstream coins and altcoins. Projects with solid fundamentals and technical advances are more likely to stand out amidst the fluctuations.
Stay patient and wait for clear direction. Once the market digests this series of significant news, the direction will become clearer. During macro-driven periods, 'cash is also a position,' and holding stablecoins while waiting for opportunities is a wise move.
In the coming days, the market will closely watch every word from Federal Reserve officials, every number from data releases, and every development in geopolitics. As crypto investors, we need to keep a calm mind; the market will always provide new opportunities, and preserving capital is key to seizing them when they arise.
What do you think about this week's macro events? Feel free to share your views and strategies in the comments so we can learn from each other and grow together amidst the volatility!
(Disclaimer: This article represents personal views and does not constitute investment advice. The cryptocurrency market is highly risky; please invest rationally.)
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