Calm Before the Storm: Everything You Need to Know About How Next Week's Fed Decision Will Set the Tone for the Crypto Market

Dear readers, next Wednesday Beijing time (December 10), the Federal Reserve will announce its final interest rate decision of the year. Global markets are holding their breath, and after previous intense volatility, the crypto market has entered a "tense calm," with Bitcoin temporarily holding above $92,000. This meeting is far more than just a question of "cut or not cut"—it could mark a key turning point for market narratives through late 2025 and early 2026. Below, we deeply analyze the core highlights of this meeting and our strategies for dealing with them.

Core Conclusions at a Glance

- Market expectations are highly unified: The CME FedWatch tool shows traders are betting the probability of a 25bps Fed rate cut in December exceeds 87%—it's almost a consensus.
- The key issue is not "whether to cut," but "how to cut": This meeting may feature a rare "hawkish rate cut"—cutting rates while signaling caution about future moves to prevent excessive market exuberance.
- A longer-term variable: Fed "changing of the guard": Chair Jerome Powell is expected to leave in May 2026, and leading candidate Kevin Hassett is considered "dovish." This leadership change could inject longer-term easing expectations into markets.
- Direct impact on the crypto market: Rate cut expectations have partially fueled BTC's recent rebound from lows. After the decision, market reaction will hinge on Fed tone: a dovish tilt could support further risk asset gains, while a hawkish tilt may trigger profit-taking as expectations are realized.

I. Core Scenario for Next Week's Meeting: Why a "Hawkish Rate Cut" Is the Most Likely Outcome

The market already has high expectations for a rate cut, but the peculiarity of this meeting is that it may be a "dance with shackles on."

1. The Case for a Rate Cut: Cooling Labor Market
The Fed's core rationale for a rate cut is shifting from "fighting inflation" to "managing labor market risks." BlackRock's think tank notes the US labor market has entered a "no hiring, no firing" stagnation, giving the Fed room for risk-management rate cuts. The September unemployment rate rose to 4.44%, giving the Fed more reason to focus on employment.
2. The Necessity of Hawkish Language: Data Gaps and Stubborn Inflation
Data vacuum: This meeting faces a rare predicament—the crucial October and November nonfarm payroll data, delayed by a government shutdown, won't be released until December 16 (after the meeting). This means the Fed is making decisions with low "visibility."
Inflation still above target: Inflation pressures have eased, but levels remain well above the 2% target. The Fed must avoid sending strong signals of an extended easing cycle to prevent a rebound in inflation expectations.

Therefore, the most likely scenario is: the Fed delivers the expected 25bps rate cut but emphasizes data dependency and patience regarding future actions in its statement and press conference, managing market expectations—the so-called "hawkish rate cut."

II. Beyond This Meeting: The Long-Term Narrative of Fed Leadership Change

More significant and far-reaching than a rate cut is the brewing "changing of the guard" at the Fed.

According to market analysis, several FOMC members, including Chair Powell, will step down in early 2026. Former White House economic advisor Kevin Hassett, considered a "dove," is currently the frontrunner to be the next chair.

What does this mean for the crypto market?
Economist Andrei Dragoș points out the new chair could face a tough situation: needing to resist further rate hikes even if inflation remains above 5%, potentially leading to deeply negative real rates. A negative real rate environment (nominal rates below inflation) has historically been an "ideal breeding ground" for non-yielding store-of-value assets like gold and Bitcoin, as it erodes fiat purchasing power and boosts the appeal of alternative stores of value. Bitwise's head of research likewise believes that easing financial conditions often precede Bitcoin's performance, and a rate cut cycle could extend the current uptrend through 2026.

III. Specific Impact on the Crypto Market and Strategic Approaches

Impact on BTC (Bitcoin): Short-Term Volatility and Long-Term Foundation

- Short-term (around the decision): The market has mostly priced in a rate cut, so beware of "buy the rumor, sell the news" dynamics. If the Fed's tone is hawkish, BTC could retest the $90,000–$91,500 support range; if unexpectedly dovish, a move toward and consolidation above the key $93,000–$95,000 resistance is likely.
- Long-term: Expectations for a rate-cutting cycle and a dovish leadership shift create a strong macro foundation for BTC. Prominent investor Mike Novogratz has stated that a dovish Fed could push BTC to higher targets. A loose liquidity macro environment is indispensable fuel for a long-term BTC bull run.

Impact on Altcoins: Lag and Selectivity

History shows a broad altcoin recovery usually requires a stable macro environment and base liquidity provided by BTC.

- ETH (Ethereum): As a bellwether among altcoins, its trend is closely linked to BTC. The recent Fusaka upgrade (lowering Layer2 costs, introducing account abstraction) has improved fundamentals, but whether the ETH/BTC ratio continues to strengthen depends on whether BTC ends its high-level consolidation.
- Other altcoins: Will show significant divergence. Funds are more likely to flow into projects with clear technical progress, strong communities, or real-world use cases. In the current "institutionalization" trend, capital may concentrate in mainstream assets rather than blindly chasing high-risk tokens.

Key Data and Event Timeline

To help you better grasp the rhythm, here are the key upcoming milestones to watch:

Fed December Rate Decision
- Date: December 10, 2025 (next Wednesday, Beijing time)
- Market expectation: Probability of a 25bps cut >87%
- Focus: Rate decision, policy statement, tone of Fed Chair's press conference.

US October & November Nonfarm Payroll Data Release
- Date: December 16, 2025 (after rate decision)
- Importance: Data will validate whether the Fed's "risk management rate cut" was justified and could trigger a secondary market move.

Fed Leadership Change Expectations
- Date: January–May 2026
- Event: Several members step down, Powell's term ends in May.
- Market impact: Sets expectations for a longer-term easing policy tone.

Conclusion and Strategic Advice

In summary, next week's Fed meeting is more of a "narrative confirmation point" than a "narrative starting point." The rate cut itself is already expected; the market's real direction will depend on how clearly the meeting signals the future path and the dovish/hawkish tilt.

Advice for followers:

1. Avoid FOMO buying at highs: Ahead of the decision, market sentiment is fragile, and BTC may continue to fluctuate below key resistance.
2. Watch key levels: Use $90,000 and $93,000 as important short-term support and resistance markers. A decisive breakout either way could guide the short-term trend.
3. Plan for the long-term: If the market pulls back due to "hawkish" remarks after the meeting, it could be a chance for long-term investors to accumulate core assets (such as BTC, ETH) in tranches. The macro liquidity shift remains the most reliable narrative.
4. Stay vigilant: The next key risk event may arise in January 2026 (such as MSCI index inclusion review). Structural pressures persist.