After the Federal Reserve's year-end decision, the crypto market stands at a crossroads—three key points that institutions are watching closely

A morning meeting minutes has further widened the eyes of global crypto investors. The signals released by the Federal Reserve in its last interest rate decision of 2025 are far more complex than market expectations.

The Truth About Rate Cuts: The Hawkish Trap Beneath Policy Sweetness

On December 11, the Federal Reserve announced a 25 basis point rate cut, bringing the federal funds rate to 3.50%-3.75%. On the surface, this appears to be a dovish expectation, but the subsequent dot plot dealt a cold shower to the market—indicating that the Fed plans to cut rates at most once more in 2026.

This “slap with a peach” policy combination has directly triggered intense market volatility. Bitcoin briefly surged after the announcement but quickly fell back into the $88,000-$92,000 range. Currently, BTC is priced at $91.27K, with a 24-hour increase of only +1.33%; Ethereum hovers around $3.13K, up +0.82%.

Even more noteworthy is the rare internal disagreement within the Fed. Out of 12 voting members, 3 voted against the decision—2 advocating for no change in rates, and 1 even calling for a 50 basis point cut. This is the largest policy disagreement in the past six years, reflecting profound differences in the Fed’s outlook on the economy.

The Fear & Greed Index has fallen to 25, entering the extreme fear zone. Trading volume has shrunk, bullish sentiment has waned, and short-term traders are generally in losses.

The Three Layers of the Meeting Minutes Cipher: Understanding It Means Grasping the Direction

Layer One: The “Pause” Expectation for January Meeting

The market has already made a clear judgment—there is an 85% probability that the Fed will keep rates unchanged in January. If the minutes confirm this expectation, liquidity will freeze in the short term, exerting ongoing pressure on crypto assets that rely on liquidity. But from another perspective, this also means the rate-cut cycle has not ended; it’s just entering a wait-and-see phase.

Layer Two: The Logic Behind Policy Disagreements

The internal discord within the Fed stems from differing views on inflation rebound and employment trends. If the concern is inflation, policy in 2026 will be more cautious; if employment is the focus, rate cuts could accelerate. This logical divergence will directly determine the liquidity environment over the next 12 months.

Layer Three: The Hidden Big Easing Move

What the market has overlooked but is most critical is that the Fed has simultaneously launched the “Reserve Management Purchase” plan. Over the next 30 days, the Fed will buy $40 billion worth of short-term government bonds. This operation, dubbed “non-QE easing,” is essentially injecting liquidity into the market.

Industry insiders estimate this plan could serve as a prelude to a new round of quantitative easing in 2026. If it evolves into large-scale liquidity injection, the crypto market could face an unexpected catalyst.

On-Chain Data Reveals Bottom Signals

Despite the macro gloom, on-chain data tells a different story.

Collective Surrender of Short-Term Holders

In the past 30 days, short-term traders have accumulated losses exceeding $4.5 billion. This scale of loss has only been seen during the 2024 yen arbitrage collapse. Historical experience suggests that when retail investors suffer losses at this level, it often signals an approaching bottom. Extreme fear is fundamentally a contrarian signal.

Bitcoin Accumulation Phenomenon

Exchange BTC balances have fallen below 2.6 million coins, hitting a new low since 2018. This indicates that institutions and large holders are extracting Bitcoin on a large scale to establish long-term holdings. No one is willing to engage in short-term trading at this moment; instead, they are accumulating for a rebound.

Hidden Risks Cannot Be Ignored

With Christmas approaching, traders in Europe and America are entering holiday mode, and market liquidity is rapidly drying up. In this low-liquidity environment, any large transaction could trigger sharp price swings.

Even more concerning is the potential rate hike by the Bank of Japan. If the BOJ tightens policy, the foundation of yen arbitrage trading will be shaken, possibly triggering a chain sell-off of risk assets globally, and the crypto market will not be immune.

Different Players’ Response Strategies

Short-term Traders: Prioritize Defensive Posture

Focus on the $86,500-$89,500 support zone for Bitcoin, and $2,860-$3,060 for Ethereum. Use a high sell-high buy-low strategy, but immediately reduce leverage. In high-volatility environments, preserving capital is more important than chasing gains.

Long-term Holders: Signal for Gradual Position Building

On-chain indicator MVRV Z-Score has entered the historic “green buy zone.” This is precisely the best opportunity to be greedy when others are panicking. Institutional investors are still continuously accumulating Bitcoin; individual investors should follow this trend and build positions gradually.

Stablecoin Holders: Key to Dollar-Cost Averaging

Divide funds into 3-4 parts and enter the market gradually over the next week. Around the Lunar New Year, Asian capital tends to accelerate into crypto assets, and this “Spring Festival effect” has been a consistent pattern over the years. Pre-positioning now can yield substantial returns at that time.

The True Opportunity Lies in Marginal Perspectives

Market focus is on the pace of rate cuts, but what truly determines the liquidity landscape in 2026 are the overlooked details.

Fed Chair Powell’s term ends in May 2026. The Trump administration is about to nominate a new Fed Chair, with top candidates including National Economic Council Director Kevin Hassett and former Fed Governor Kevin Warsh. A new leadership could imply a potential shift in policy style, which will be the ultimate variable shaping the crypto market’s fate in 2026.

Micro Truths in the Macro Pattern

The future of the crypto market will never be decided by a single Fed meeting. Institutionalization is accelerating, with the latest data showing that 83% of institutional investors plan to expand their crypto holdings in 2025. This trend indicates that regardless of short-term policy fluctuations, long-term liquidity continues to flow into this market.

For investors, the real test is not reacting to short-term policy changes but correctly judging the long-term liquidity trend. When the market enters a new year in extreme fear, it is often the best time for institutional players to quietly position themselves.