🚨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 d,own 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.
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The market already expects a 95% odds of 25 BPS rate cut. That part won’t move the markets much but the real volatility will come from liquidity signals like Powell’s tone and the Fed’s view on how they see the economy, funding conditions, and inflation.
There’s been clear liquidity stress in the system.
SOFR has been spiking, showing banks are feeling funding pressure. Because of this, banks are expecting the Fed to announce some form of liquidity relief even a small one, to ease the stress.
If the Fed hints at QE, or providing short term liquidity support, it becomes bullish immediately:
• Funding pressure drops • Bond yields go down • Risk assets gets bullish momentum
The tone tomorrow will matter more than anything else.
During the last FOMC, Powell sounded hawkish and BTC dumped hard.
This time, there are 2 scenarios going into tomorrow's FOMC.
Hawkish cut: 1. Powell says inflation is still not fully under control 2. Says the labor market is improving → In the case, yields will spike and risk assets could dump.
Dovish cut: 1. Powell says tariff impact on inflation is minimal 2. Says the labor market is still weak → In this case, yields will go down, liquidity expectations will rise and crypto could pump
And if Powell adds even a hint of liquidity support on top of a dovish cut? That’s where things can flip bullish really fast.
So the roadmap is simple:
• Dovish + liquidity support → Bullish for markets • Dovish only → Small pump • Hawkish cut → Market sell-off similar to October • No liquidity help → Markets will continue sideways price action