In the early hours of tonight, the answer will be revealed - will the Fed cut interest rates this time? Will the crypto market take off or just smash the market?

Let's look at the data first. The annualized growth rate of GDP in the United States in the third quarter was only 0.9%, and the economy was significantly weak. The core PCE price index rose 2.6% year-on-year in October, and inflationary pressures are easing. According to CME FedWatch data, the market has given an 89.2% probability of a 25 basis point rate cut.

But here's the problem: when expectations are too consistent, it's often easy to get a moth. Is the routine of "buying expectations, selling facts" still rare in the currency circle?

More importantly, in addition to interest rate decisions, this meeting will also release new economic forecasts and dot plots. If Powell's speech deviates from market expectations, the impact may be greater than the rate cut itself.

What is the current state of the market? **

Bitcoin has surpassed $94,000 and Ethereum has also stood above $3,300, partly reflecting expectations of interest rate cuts. But the fear and greed index is still hovering in the neutral zone, indicating that most people are still waiting and seeing.

What is dangerous is leverage. Now the funding rate of perpetual contracts on the whole network is still high, and the leveraged long positions are very full. If the news falls short of expectations, these high leverages may explode in an instant. On December 10, more than $300 million of shorts were liquidated, and it goes without saying how violent the volatility was.

How will interest rate cuts affect currency prices? **

The conduction path is actually quite clear:
- Loose liquidity, making it easier for funds to flow into risky assets
- The US dollar may weaken, relatively increasing the attractiveness of cryptocurrencies
- Risk appetite is rising, and hot money is starting to chase high-yield targets

Historical experience shows that Bitcoin and US Treasury yields are generally negatively correlated. After the rate cut in September 2024, both Bitcoin and Ethereum rose. But this time the macro environment is different and cannot be applied directly.

**Three possible outcomes**

**Dovish rate cut (probability of about 40%)**: 25 basis points cut, while releasing a signal of continued easing. Bitcoin may rush to $96,000-98,000, Ethereum tests $3,500, and altcoins follow suit.

**Hawkish rate cut (probability of about 45%)**: 25 basis points cut, but emphasizing that inflation risks are still there. The market may pull back, Bitcoin steps back to $90,000-91,000, Ethereum tests $3,200 support, high-leverage bulls beware.

**Hold (15% probability)**: Keep interest rates unchanged. Although this situation is unlikely, once it happens, the market will fluctuate sharply, and Bitcoin may fall to $88,000 or even lower, and the scale of the entire network may exceed $1 billion.

There are only a few hours left until the resolution is announced. Which side are you betting on?