The Federal Open Market Committee (FOMC) opens its December 2025 session today, with the decision set to be announced tomorrow, December 10, at 2:00 PM Eastern Time.
Investors and traders are closely watching to see if the central bank will continue its easing cycle or surprise the markets by keeping rates steady. As the final policy announcement for the year, this outcome carries significant weight for the cryptocurrency markets.
Rate cut scenario: What would happen if the Federal Reserve provided a cut of 25 basis points in December
As the announcement approaches, market expectations are heavily skewed toward a rate cut, with a 25 basis point move expected to be the most likely outcome. CME FedWatch data shows that traders favor an 89.4% chance of a quarter-point cut at the December 10 meeting.
In contrast, only about 10.6% of market participants believe the Federal Reserve will keep interest rates at the current range of 3.75%-4.00%.
If the Federal Reserve proceeds with the bond cut, it will be the third in a row this year, following adjustments made in September and October. This will lower the interest rate to 3.50%-3.75%.
The September cut led to a temporary increase in the cryptocurrency market, with Bitcoin and Ethereum recording gains. Meanwhile, the US dollar fell to its weakest level since early 2022.
However, the broader market pullback has mitigated the impact of the October cut. In December, volatility remains high, with sharp fluctuations in both directions.
However, many analysts argue that another cut at this stage may be seen as 'optimistic' for cryptocurrencies.
"If you think this is not optimism for Bitcoin and risk assets, you are not paying attention. Prepare for volatility. Get ready for green candles," said the analyst.
For cryptocurrencies, this standard adjustment is moderately optimistic, as it boosts liquidity and encourages investment in risky assets like Bitcoin and Ethereum. However, Crypto Rover pointed out that markets have already adjusted to this outcome, so the announcement itself is unlikely to elicit a significant reaction.
According to the analyst, the real catalyst for market movement will be Powell's press conference, not the rate cut itself.
"Bank of America expects Powell to hint at 'Federal Reserve management purchases,' i.e., injecting new liquidity to stabilize funding pressures on smaller banks. This will help normalize SOFR and support liquidity across the markets. If Powell appears cautious and says inflation is starting to cool, that tariffs have not changed the trend, and that labor is receding, that will give markets the green light to expect more cuts. But if he seems hawkish, like at the last Federal Open Market Committee meeting, Bitcoin and alternatives will crash,".
Meanwhile, some investors expect a sharper cut of 50 basis points.
This would be a strong political signal, leading to rapid liquidity expansion and increasing dollar weakness. Although the likelihood of this scenario is low, it is likely to have a stronger positive impact on cryptocurrency markets.
No rate cut scenario: How the Federal Reserve's hold may affect cryptocurrency sentiment
Although few analysts expect it, the possibility of the Federal Reserve holding interest rates cannot be ruled out. The price decision comes amid disruptions in economic indicators. The government shutdown has halted the release of key data from the Bureau of Labor Statistics. This gap has left Federal Reserve officials operating with limited visibility.
"What do you do if you're driving in the fog? Federal Reserve Chairman Jerome Powell said in October: 'You slow down.'
The Federal Reserve itself remains divided. Powell indicated that policymakers are facing pressure from both sides of the central bank's mandate. After the last rate cut, the president dampened hopes for further easing in December.
"There have been strongly differing views on how to proceed in December. An additional cut in the policy rate at the December meeting is not a foregone conclusion, far from it," he said.
If that happens, cryptocurrency markets may react negatively in the short term. The hold will temporarily affect sentiment and delay any bullish momentum that a cut might stimulate.
Despite the risks, long-term trends may still favor cryptocurrency markets. Reports indicate that the Federal Reserve intends to purchase $45 billion in Treasury bonds monthly starting January 2026. This policy could enhance liquidity in the financial system and stimulate investment in risk assets.
"This will inject massive liquidity into the markets. It means one thing only: quantitative easing will return. But this time they won't call it QE," stated Lark Davis.
Whether the Federal Reserve announces a cut of 25 basis points as expected, surprises with a larger cut, or holds rates higher, its decision is likely to cause significant volatility in cryptocurrency markets. The subsequent press conference and forward guidance from President Powell will play a key role, as traders focus on future policy outlooks.