A major situation has arisen! A larger market fluctuation is about to come! At 3 AM tonight, the Federal Reserve FOMC meeting will announce monetary policy. Most people in the market now believe that the Federal Reserve will implement a third rate cut, reducing by 25 basis points, which will definitely cause significant market volatility.

The current state of the U.S. economy is not looking good. The labor market is performing poorly, and many companies are laying off employees. Additionally, because of the tariffs, prices have started to rise again. Worse yet, some important economic data that was supposed to be released could not be announced on time due to the government shutdown.

Although everyone thinks that the Federal Reserve is very likely to cut interest rates by 25 basis points tonight, after the rate cut, the Federal Reserve may not give a clear affirmative answer on whether it will continue to cut rates later, and it may even release some hawkish signals.
So what is hawkish? It means that the Federal Reserve's attitude is relatively tough, and monetary policy will not be so loose. If this is the case, the US dollar is likely to rebound, and the prices of risk assets like BTC and ETH will be suppressed. However, in the long run, the general trend of a weaker dollar will not change.

Da Mao thinks that the main focus of tonight's meeting is on the following aspects:

1. The wording in the Federal Reserve's policy statement. If it deletes the previous statement about tightening policy or confirms that the current inflation situation has improved, that would release a dovish signal, which is good for the crypto market. If it continues to emphasize concerns about inflation or believes the economic outlook is unclear, that would be a hawkish signal.

2. The dot plot can reveal the expectations of Federal Reserve officials regarding future interest rates. This time, we will focus on their predictions for the federal funds rate at the end of 2026. If they believe the number of rate cuts next year will increase, everyone will think monetary policy will be looser, risk sentiment will rise, and cryptocurrency prices will follow suit. If they believe the number of rate cuts will remain unchanged or even decrease, that will lead to a hawkish shock, causing cryptocurrency prices to fall.

3. When Powell speaks, he needs to find a balance between controlling inflation and not letting policy relax too quickly. If his remarks lean dovish and support rate cuts, that would be good for the crypto market. If he continues to emphasize concerns about inflation and states that policy needs to be adjusted flexibly according to the situation, people may perceive him as hawkish, which will suppress cryptocurrency prices. Moreover, his speech may also be influenced by political factors, making the situation even more uncertain.

If there is a rate cut but the Federal Reserve's attitude is hawkish, then the crypto market will have to bear the pressure of adjustment. The US dollar will rebound, real interest rates will rise, and cryptocurrency prices will be suppressed, leading people to possibly transfer their money to safer assets.

If there is a rate cut tonight and the overall attitude of the Federal Reserve is dovish, that would be a significant positive for the crypto market. After the rate cut, the returns from traditional investment methods like saving in banks or buying bonds will decrease, and the US dollar will also weaken. At this time, people will be more willing to invest their money in crypto assets, and the prices of mainstream coins like BTC and ETH will rise.

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