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[Major Decode] The FOMC Meeting Tonight Will Determine Everything: A Rate Cut Has Become a 'Clear Signal', and the Real Explosive Point Is Here!
Meeting time: 3 AM Beijing time on December 11, results will be announced!
Core conclusion preview: A rate cut of 25 basis points (to 3.50%-3.75%) is already the market consensus, with a probability exceeding 85%.
This 'clear signal' itself will not ignite the market. The real eye of the storm tonight is how Powell leads the most divided Federal Reserve in history out of the fog, possibly signaling a 'liquidity nuclear bomb' more powerful than a rate cut for the world.
Act One: Division! Powell's 'Internal and External Troubles'
Tonight, Powell is facing the most severe internal challenge of his term.
· Severe factional opposition:
The internal 'hawks and doves' of the FOMC are almost evenly matched. About half of the officials (5 voting members, even 10 out of the 19 members) oppose or are skeptical of further rate cuts.
· 🐦 Dovish Concerns:
The labor market has sounded the alarm; if rate cuts are not preemptively implemented, the risk of a nonlinear surge in the unemployment rate will be difficult to reverse.
· 🦅 Hawkish Warning:
Inflation still exceeds the 2% target, and rash rate cuts may lead to uncontrolled inflation expectations, nullifying previous efforts.
· Historic Divergence:
If three more dissenting votes appear tonight, the total dissenting votes in the last three meetings will reach 8, matching the total from the previous 47 meetings. Powell's leadership is facing unprecedented scrutiny.
· Key Observation Points:
Powell's post-meeting speech. The market will parse it word for word, particularly focusing on whether he uses the phrase 'in a good place.' If used, it suggests a pause in rate cuts may occur in January; conversely, it may open the door for continued easing early next year.
Act Two: The Puzzle! Difficult Choices in a 'Vacuum' of Data
A rare situation has exacerbated the difficulty of decision-making: due to the previous government shutdown, Fed officials lack key inflation (CPI) and employment data for October and November. They are essentially making predictions for next year 'blindfolded.'
· 'Dot Plot' Suspense: Tonight, the latest interest rate forecast dot plot will be released. The September dot plot has already shown significant divergence among members regarding the path for 2026 (some expect 4-5 cuts, while others expect no cuts).
Amidst missing data, tonight's dot plot may be more dispersed and ambiguous, which itself is a source of market volatility.
· Powell's 'Balancing Act': The market generally expects Powell's most likely strategy to be 'cut first, then impose limits.'
That is, while implementing rate cuts, raising the threshold for further rate cuts through statements and speeches to appease hawks.
Act Three: The Nuclear Option! What matters more than interest rates - $400 billion liquidity shift?
For Bitcoin and global risk assets, there is a potential signal tonight that is more significant than the rate cut itself: the Fed's balance sheet turning.
· Halting balance sheet reduction is just the beginning: The Fed officially stopped quantitative tightening (QT) on December 1. But this is just the first step.
· The real bombshell: Initiating 'Reserve Management Purchase': The market is closely watching whether the Fed will announce the initiation of the 'Reserve Management Purchase' (RMP) plan, which may begin in January, purchasing about $35-45 billion of short-term government bonds monthly.
· What does it mean? Although this is not a direct 'quantitative easing' (QE), it implies that the Fed's balance sheet will shift from contraction back to expansion. Analysts indicate that this move will inject over $400 billion of liquidity into the financial system annually. Historically, assets like Bitcoin are far more sensitive to liquidity changes than to minor adjustments in interest rates.
Act Four: Simulation! Tonight's script in the crypto space and survival guide
1. Bitcoin's own situation: Pressure and hope coexist
· Pressured Situation: Bitcoin is currently under pressure, with many addresses in an unrealized loss state, and the daily on-chain loss nearing $500 million. Bitcoin has only risen after 1 of the past 7 FOMC meetings this year.
· Positive Signal: Under pressure, 'smart money' is in action. Over the past week, large wallets have increased their holdings by about 45,000 Bitcoins, and exchange balances continue to decline, indicating that assets are flowing from short-term traders to long-term holders.
2. Three major scenarios for tonight
Based on the above information, tonight's trend may present the following scenario:
Scenario One: Dovish Surprise (Probability: Medium)
· Trigger Conditions: Rate cut of 25 basis points + Powell emphasizes employment risks + Clearly releases 'Reserve Management Purchase' (RMP) signal.
· Market Reaction: The dollar falls, and liquidity expectations rise. Bitcoin is expected to break through the key resistance range of $92,000-$93,500 strongly, initiating a new upward trend.
Scenario Two: In line with expectations (Probability: High)
· Trigger Conditions: Rate cut of 25 basis points + Powell reiterates 'data-dependent' + Vague comments on the balance sheet + Continued divergence in the dot plot.
· Market Reaction: Due to the good news being priced in, the market may fluctuate but lacks direction. Bitcoin is likely to continue oscillating between $82,000 and $75,000. Beware of short-term pullbacks of 'buy the expectation, sell the fact.'
Scenario Three: Hawkish Shock (Probability: Low)
· Trigger Conditions: Rate cut of 25 basis points + Powell emphasizes inflation stickiness, clearly suppressing future rate cut expectations + More than 3 dissenting votes appear.
· Market Reaction: The dollar strengthens, and risk assets are generally under pressure. Bitcoin may test lower support. However, if this does not change the long-term trend of liquidity shift, a deep pullback may present medium to long-term investment opportunities.
3. Survival Guide: How to cope with tonight?
· Focus on the Core: Forget about the rate cut itself. Pay attention to Powell's use of the phrase 'in a good place,' as well as any statements regarding 'balance sheet' and 'reserves.'
· Key Price Levels: Watch if $93,500 can be effectively broken to the upside; watch the support strength at $82,000 to the downside.
· Primary Rule: On a night when the Fed itself faces significant uncertainty, controlling positions and managing risk is far more important than blindly betting on direction. The true trend direction may need to wait for the delayed data to be released next week to be ultimately established.
Tonight, what we witness is not only a decision on interest rates but also a crossroads of an era: Has the era of unity at the Fed come to an end? Will the gates of global liquidity reopen? The answer is about to be revealed; fasten your seatbelts, and let's witness history together!
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