FOMC Meeting Today Could Decide a Crypto Santa Rally or December Drop

All eyes are on the Fed today. The central bank's final policy decision of 2025 isn't just about interest rates—it's the potential trigger for a massive year-end crypto move.

Will Powell Play Santa or Scrooge?

A dovish tilt from Jerome Powell could send a tidal wave of liquidity searching for high-beta returns. Traders are already positioning for that scenario, betting that even a hint of future cuts could ignite a classic 'Santa Rally' across digital asset markets. The logic is simple: easier money flows into riskier assets first.

The Flipside: A Hawkish Holiday

But the Fed could just as easily slam the brakes. Stubborn inflation data or overly optimistic economic projections might force a more restrictive tone. That's the nightmare fuel for crypto bulls. A hawkish surprise would likely crush short-term sentiment, turning December's festive charts into a sea of red and validating every Wall Street skeptic who still calls crypto a 'risk-off' asset—right before their own holiday bonuses clear.

The market's verdict will be instant and brutal. Algorithmic traders have their orders queued, ready to amplify the Fed's message within milliseconds. For once, the 'smart money' and the crypto degens are watching the same screen.

One thing's certain: by the closing bell, we'll know if it's time to celebrate or just another reminder that in finance, the only free lunch is the cheap prosecco at the annual banking conference.

The Market Wants More Than Just Another Rate Cut 

The Fed already cut rates in the past two meetings, and another cut is almost fully expected. But this time the focus isn’t the cut itself, it's what comes next.

Several major banks are saying the central bank might hint at new liquidity tools to help ease stress in the financial system. Some even think the Fed could bring back direct reserve injections. If Powell confirms anything along these lines, it WOULD signal that more money might enter the market.

And when liquidity rises, crypto usually moves first.

But not everyone is convinced the Federal Reserve's decision will go soft according to Crypto Rover.

Source: X (formerly Twitter) 

Why Traders Are Split Before the FOMC Meeting Today

Fresh economic data added confusion.
The October JOLTs report showed more job openings than predicted, meaning companies are still hiring. That’s usually a sign the labor market is strong, not weak.

On top of that, inflation is holding above the Fed’s target, and bond yields jumped again. This combination normally pushes the Fed into a more hawkish stance, even when cutting rates. That’s why some investors worry that Powell might sound cautious, just like he did in December 2024.

Two Clear Paths From Here: Rally or Dump

Based on the current market mood, tomorrow can go in two very different directions:

If the Fed Turns Friendly (Bullish)

• Rate cut confirmed

• Liquidity support or new tools mentioned

• Signs of cooling in jobs or demand

This would almost guarantee a Crypto Santa Rally, especially for Bitcoin, Ethereum, and risk assets.

If the Fed Sounds Hawkish (Bearish)

• Rate cut, but with warnings

• No mention of bond buying or injections

• Strong comments on inflation

This would echo the FOMC meeting December 2024, which was followed by a brutal 60–80% drop in altcoins.

The market clearly remembers that.

Why the Crypto Market Rose Ahead of the FOMC Meeting

As per CoinMarketCap, Bitcoin jumped nearly 3% today, and the rest of the market followed. One of the biggest drivers was a large short squeeze; hundreds of millions of dollars in short positions were liquidated as BTC pushed above $94,000. When that happens, forced buying lifts prices sharply. 

Source: CMC

ETF inflows also picked up again, with $151 million entering on December 9. Technical indicators like MACD showed momentum turning back upward. ethereum climbed 7%, while Solana and Cardano also moved strongly.

The Fear and Greed Index ROSE from last month’s extreme fear level of 11 to 30, showing that sentiment is slowly improving. 

Final Thoughts

The FOMC meeting today is not a regular Fed meeting. It has the power to decide how crypto closes the year. A soft tone from Powell could light up a Crypto Santa Rally, while a tough stance could trigger a December drop.

For now, all eyes are on tomorrow’s decision and the tone that follows. 
This article is for informational purposes only and not a financial advice, kindly do your own research before investing.