And this is going to bring massive volatility in the global markets.
Right now, the Fed is stuck between weak job growth and high inflation.
Powell indirectly hinted that economic growth is slowing down, while inflation is still too high.
That’s stagflation, which is probably the worst thing that could happen, and here's why.
When the economy slows but inflation stays hot, the Fed enters a dilemma.
It can’t hike rates, as it'll make the labour market much worse. It can’t cut aggressively, as the risk of inflation going higher will rise. They can’t pause because the economy needs liquidity and lower yields; otherwise, bankruptcies and credit defaults will rise.
So what can the Fed do in this situation?
From here, the market has two possible paths:
Scenario 1 (short-term pain, long-term gain):
A broader market crash first, which will make the labor market worse , but will lower spending and bring inflation down. After that, the Fed could resume QE, which will send asset prices higher. In this case, BTC and alcohol will have the worst dump and then the best recovery.
Scenario 2 (short-term gain, long-term pain):
The Fed started easing its policy despite rising inflation. This will definitely pump up the markets, but inflation will continue to go up. At one point, the Fed will have to pause, and then the crash will be much more severe. In this scenario, the crypto market will see a massive reversal and then one of the worst crashes.
In both paths, the crypto market will be the fastest horse.
Looking at Powell's speech, they might be moving towards Scenario 1.
The Fed 2026 dot plot is quite hawkish, and they are looking to bring inflation towards their target.
This means the stock and crypto market could see something like March 2020 or April 2025 before things get better.
And once the Fed starts QE5, you'll experience one of the best pumps of your life.
🚨 Tomorrow’s FOMC meeting is the most important one since December 2024 🚨
It could decide whether crypto gets a Santa Rally or a Santa Dump.
The Fed has already cut rates in the last two meetings and will likely cut rates again, but this time markets expect something much bigger.
Major banks are hinting that tomorrow’s meeting may include the first signs of new liquidity tools. Some institutions even expect direct reserve injections to calm the banking system. If Powell confirms any of this, it would be one of the strongest bullish signals for crypto, which reacts the fastest to liquidity shifts.
But the market is split.
Today, October JOLTs job openings data came in higher than expected, showing labor demand is rising again. Inflation remains well above the Fed’s 2% target, and bond yields are spiking.
This is a clear sign the bond market expects a more hawkish Fed.
This means there are 2 major scenarios, and either of them could happen tomorrow.
Bullish Scenario:
Fed cut rates Announces liquidity injection Mentions that the labor market is weak
Bearish Scenario:
Fed cut rates Shows uncertainty about future cuts No mention of bond buying, and also admits that inflation is still hot
But why is this FOMC meeting the most important since December 2024?
This is because the Fed turned very hawkish after the December 2024 rate cut and mentioned that inflation is running hot.
Due to this, ALTs peaked in December and they went down 60%-80% after that.
If Powell says something similar, Santa Pump could become Santa Dump.
And if Powell says the exact opposite of December 2024 meeting, the crypto market will see a relief rally.