Today’s major news has directly reversed the market’s overall expectations for liquidity next year.

Recent statements from Trump revealed that his preferred candidate for the new Federal Reserve Chair is not the "dove" that Wall Street previously bet on. Once this policy signal was released, traders’ reactions were very straightforward—immediately sharply lowering expectations for rate cuts in 2026.

CME data shows how dramatic the change has been: the current market probability is that the Federal Reserve will hold rates steady without cuts until the end of 2026, reaching as high as 11.8%; meanwhile, the probability of cumulative rate cuts exceeding 25 basis points has fallen below 70%. Simply put—what everyone expected as the "money-printing year" might only be half as likely.

Why is this so critical for the crypto market?

In plain terms, the entire logic of the cryptocurrency market is based on expectations of global liquidity. The main storyline in the crypto space over the past two years has been betting on a wave of rate cuts in 2026. Now that this expectation has been severely damaged, market sentiment will undoubtedly be impacted. In the short term, this is a bearish signal.

So what should ordinary investors do now? Here are a few suggestions:

**First, immediately review leveraged positions.** Under tightening rate expectations, market volatility will significantly increase—this is a historical pattern. High leverage in such an environment is like dancing on the edge of a cliff, with enormous risk. If you still hold positions with several times leverage, reduce your leverage before a margin call happens.

**Second, refocus on core assets.** When liquidity expectations tighten, funds will instinctively seek higher certainty. This means mainstream cryptocurrencies like Bitcoin and Ethereum will tend to resist declines, while concept-based, high-risk altcoins may face accelerated outflows. Now is the time to shift investment focus back to assets with genuine consensus.

**Third, stay patient and wait for further confirmation.** An hawkish Federal Reserve Chair is indeed bearish in the short term, but from a long-term perspective, it also has another implication—the market will be forced to clear bubbles, and truly competitive projects will stand out. The key is to wait for the final nomination confirmation and subsequent macroeconomic data.

The ultimate direction of this policy shift depends on who Trump will nominate to succeed Powell. That person’s policy stance is very likely to redefine the market trend for the coming years.