Fed Set to Cut 25bps on Dec 10; Bitcoin Primed for Volatility
The Federal Reserve is widely expected to deliver a 25 basis-point rate cut at the FOMC meeting on December 10, marking the third cut of 2025. Cooler inflation data—notably the U.S. PCE report—plus commentary from former Fed official Kevin Hassett have pushed markets to price roughly a 90% probability of a cut. The Fed will also publish updated economic projections and Fed Chair Jerome Powell’s post-meeting remarks will be watched for guidance on 2026 policy. Crypto markets, led by Bitcoin, have already reacted: BTC briefly traded above $90,000 as traders anticipated cheaper borrowing costs and greater risk appetite. Analysts warn the cut is largely priced in, so a dovish dot plot and guidance could further boost liquidity and trigger short squeezes, while a “hawkish cut” or an unexpected pause could prompt risk-off flows and sharp corrections. Historical FOMC moves have led to large short-term BTC swings (examples cited: ~19% and ~25% drops after prior meetings). Traders should prepare for heightened volatility around Dec. 10, monitor Powell’s tone and the dot plot closely, and size positions for potential abrupt moves — dovish outcomes may offer buy-the-dip opportunities, while any deviation from expectations could produce rapid downside and liquidation risk.
Bullish
A 25bp Fed cut is broadly priced in and the near-term impact on Bitcoin is likely conditional: overall the expected rate reduction and any dovish forward guidance increase liquidity and risk asset demand, which is bullish for BTC. The market has already shown this sensitivity—BTC rallied above $90k on rising cut odds. If the Fed delivers a dovish dot plot and Powell signals continued easing or slower QT, that could trigger further inflows and short squeezes, amplifying upside in the short term. However, because the cut is largely anticipated, much of the upside may be front-loaded; any perceived ‘hawkish cut’ (less dovish guidance or a pause) or cautious Powell remarks could prompt rapid risk-off moves and sharp BTC pullbacks. Therefore, the net immediate bias is bullish given current pricing and liquidity outlook, but traders should expect heightened volatility, elevated liquidation risk in short positions, and the possibility of swift reversals if the Fed’s narrative deviates from market expectations.