FOMC December 2025: What to expect from the Fed’s final meeting of the year and why it matters for crypto
The Federal Reserve’s last policy meeting of 2025 is set for December 9–10, and it could shape the tone for global markets heading into 2026. With investors largely betting on another interest rate cut and a fresh batch of economic projections, this FOMC gathering is poised to be one of the most closely watched events of the year for traditional finance and digital assets alike.
Key dates and schedule for the December 2025 FOMC meeting
The December meeting is the eighth and final Federal Open Market Committee gathering of 2025. According to the Fed’s published calendar:
– December 9, 2025 – Closed-door sessions and internal deliberations among FOMC members.
– December 10, 2025 – Policy decisions and communications go public.
– 2:00 p.m. ET – Release of the FOMC policy statement and the latest Summary of Economic Projections (SEP).
– 2:30 p.m. ET – Press conference with Fed Chair Jerome Powell.
The official minutes from this meeting are scheduled for publication three weeks later, on January 8, 2026, offering a deeper look into the debate and the balance of opinions inside the committee.
Market expectations: Another 25 bp rate cut on the table
Derivatives markets currently price in roughly an 87% probability that the Fed will trim the federal funds rate by 25 basis points, moving the target range down to 3.50%–3.75%. The benchmark rate currently stands at 3.75%–4.00%, after the most recent reduction in October.
Despite the market’s conviction, officials themselves are far from unanimous. Several FOMC members have emphasized that stubbornly mixed inflation readings and robust GDP growth may argue for patience. Others point to easing price pressures and softening pockets in the labor market as justification for continuing with moderate cuts.
Because of this split, traders will scrutinize not only the rate decision but also the forward guidance and the updated dot plot, which reveals where each policymaker expects interest rates to be over the next few years. A lower cluster of dots for 2026 would signal a more dovish stance and raise the odds of an additional 50 basis points of easing next year if inflation keeps drifting lower.
End of quantitative tightening: Liquidity slowly returns
Another pivotal element of this meeting is confirmation that quantitative tightening (QT) has already ended as of December 1, 2025. That move halts the Fed’s $95 billion-per-month balance sheet runoff in Treasury and mortgage-backed securities.
While the immediate impact may be subtle, the cessation of QT means that, over time, less liquidity will be drained from the financial system. For risk assets—equities, high-yield credit, and especially crypto—this backdrop of gradually improving liquidity often acts as a tailwind, amplifying the impact of lower policy rates.
Why the December meeting always matters more
December FOMC meetings carry extra weight because they include the Summary of Economic Projections, which updates the Fed’s outlook for:
– Inflation (PCE and core PCE)
– Real GDP growth
– Unemployment rate
– The longer-run neutral rate
These projections effectively serve as the Fed’s roadmap for the economy and policy, shaping expectations for currencies, bonds, and stocks. Foreign exchange traders reposition around anticipated rate differentials, while equity and bond markets tend to react abruptly to any shift in the Fed’s growth or inflation narrative.
For 2026, markets will be looking for confirmation that the Fed sees:
– Inflation remaining on a downward trajectory toward target
– Growth moderating but avoiding a deep recession
– Room for further policy easing without reigniting price pressures
Any surprise—whether a higher inflation forecast or a more cautious outlook on growth—could reprice assets across the board.
Crypto’s sensitivity to Fed decisions
Digital asset markets are especially attuned to changes in Fed policy. Historically, lower interest rates and rising liquidity have encouraged investors to embrace riskier assets, including Bitcoin, Ethereum, and a wide spectrum of altcoins. When borrowing costs fall and cash yields become less attractive, capital tends to rotate toward higher-volatility plays that promise outsized returns.
In this environment, crypto often behaves like a high-beta extension of tech and growth stocks. Bullish Fed surprises—dovish language, larger-than-expected cuts, or more aggressive easing projected for future years—can trigger rapid inflows into digital assets, while hawkish surprises tend to spark sharp drawdowns.
Bullish scenario: Rate cut and dovish guidance
Many analysts argue that a 25 basis point cut, combined with signals of additional easing in 2026, could power another leg higher in the crypto rally. If the dot plot points to more cuts next year and Powell emphasizes confidence that inflation is moving sustainably toward 2%, risk appetite could surge.
In such a dovish scenario, some experts suggest that:
– Bitcoin might push toward the $95,000–$100,000 zone, continuing its role as the leading “macro asset” within crypto.
– Ethereum, benefiting from its role in DeFi and smart contracts, could track Bitcoin’s move with a slightly higher beta.
– Solana and other high-performance layer-1s might see exaggerated upside as traders seek higher returns within the altcoin space.
This path would likely be supported by:
– Increased demand from institutional investors reallocating from bonds and cash
– Renewed retail interest chasing momentum
– Strong activity in derivatives markets, with call options and leveraged long positions expanding
Bearish or “hawkish pause” scenario: Pressure on Bitcoin and altcoins
The risk for crypto bulls lies in the possibility that the Fed holds rates steady or delivers a cut but couches it in hawkish language—highlighting concerns about re-accelerating inflation or overheating financial conditions.
If Powell emphasizes uncertainty and hints that further cuts are not guaranteed, markets could interpret the move as a hawkish pause in disguise. In that case:
– Bitcoin could retreat toward the $87,000–$90,000 range, unwinding part of its prior gains.
– Altcoins might suffer more pronounced drawdowns, as traders reduce exposure to the most volatile segments first.
– Leveraged positions—especially in perpetual futures and options—would likely be unwound rapidly, adding to selling pressure.
Derivatives data already point to expectations of an elevated reaction: implied volatility could jump by 20–30% around the decision and press conference, indicating that investors are bracing for large intraday swings in both directions.
How different asset classes might react
The Fed’s December decision will not just move crypto. Other major asset classes are likely to respond as well:
– Treasuries: A dovish outcome could push yields lower, especially on the short end, while a hawkish pause might trigger a bear flattening (short rates up, long rates relatively stable).
– Equities: Growth and tech stocks typically benefit from lower discount rates; a supportive Fed stance would reinforce their leadership. A hawkish tone could spark a rotation into defensives or value.
– US dollar: More cuts than expected might weaken the dollar, boosting commodities and non-US assets. A tougher line on inflation could support the dollar and weigh on global risk appetite.
Crypto sits at the intersection of these moves, reacting to changes in the dollar, real yields, and overall risk sentiment.
What investors will study beyond the headline rate
Savvy market participants will look beyond the simple “cut or no cut” narrative and examine:
1. The tone of the policy statement – Is the Fed still describing inflation risks as “elevated,” or does it signal more confidence?
2. Powell’s Q&A – How he responds to questions about data dependence, labor market cooling, and financial stability can shift expectations more than the statement itself.
3. The dot plot distribution – Outliers, clustering, and changes in the median projection for 2026 will be dissected line by line.
4. Balance sheet commentary – Any hint that the Fed might move from QT pause to eventual reinvestment or balance sheet expansion would be read as an additional liquidity boost.
For crypto traders, the critical takeaway is not only the rate move, but the trajectory that the Fed sketches for the next 12–18 months.
Positioning into the decision: Risk and strategy considerations
While each investor’s situation is unique, several general themes tend to guide positioning around such a pivotal meeting:
– Volatility management: With options markets signaling a 20–30% jump in volatility, some traders hedge directional bets or use options spreads to limit downside while staying exposed to upside.
– Leverage control: Excessive leverage becomes dangerous when markets are bracing for binary outcomes. Reducing leverage ahead of the meeting can lower the risk of forced liquidations.
– Liquidity awareness: Spreads can widen and slippage can increase during the minutes around the announcement and press conference, especially in smaller-cap altcoins.
– Time horizon: Long-term holders often focus on the broader macro path—declining rates and the end of QT—rather than trying to time every intraday swing.
Looking into early 2026: Lasting impact on risk assets
Whatever the immediate market reaction on December 10, the Fed’s message will likely reverberate well into early 2026. If the meeting confirms a path of gradual easing and stable inflation, risk assets could enjoy a supportive macro backdrop and extend year-end rallies.
Conversely, if policymakers signal that they are close to the lower bound of how far they are willing to cut without reigniting inflation, markets may need to reassess valuations—particularly in segments that price in aggressive growth and cheap money, such as speculative tech and smaller-cap altcoins.
For crypto in particular, the combination of:
– The end of $95 billion-per-month QT,
– A potential 3.50%–3.75% policy rate range, and
– The prospect of more cuts in 2026
creates a powerful macro mix that could continue to shape flows, narratives, and price behavior well beyond this single meeting. Whether December’s decision sparks a year-end breakout or a temporary shakeout, it will help define the next chapter for Bitcoin, Ethereum, Solana, and the broader digital asset ecosystem as 2026 begins.