Jerome Powell’s comments suggested a more cautious stance on monetary easing. The speech also reinforced concerns about inflation risks and the slowing labor market, creating renewed volatility in digital assets.

Fed Signals a Pause as Neutral Rate Comes Into View

Powell emphasized that this year’s rate reductions have brought policy into a “range of plausible estimates of neutral.” This phrasing indicated that the Fed sees less urgency for further cuts. He said any additional moves would depend on incoming data, the evolving economic outlook, and the balance of risks. The message aligned with a growing market view that an aggressive cutting cycle is unlikely.

The Fed chair also stated that labor market conditions are cooling while inflation remains somewhat elevated. He noted that downside risks to employment have increased, yet inflation risks continue to show an upward tilt. Powell reiterated that few inflation readings have been released since the October meeting, but the overall picture has not shifted significantly, justifying the recent twenty-five basis-point cut.

Additionally, Powell confirmed that purchases of short-term Treasury securities will support effective control of the policy rate. This operational detail highlights the Fed’s effort to manage volatility in funding markets during a sensitive policy phase.

January Rate-Cut Odds Collapse During Powell’s Speech

CME FedWatch data showed a sharp drop in expectations for another rate cut at the January meeting. Markets now assign only a twenty-four percent chance of a twenty-five-basis-point cut, while the probability of rates remaining unchanged has surged to seventy-six percent. This shift reflects the Fed’s more data-dependent posture heading into 2026.

The Federal Reserve will have two critical inflation reports to evaluate before the meeting. The Producer Price Index arrives on January fourteenth, and the Consumer Price Index will be released one day earlier. Both will heavily influence rate-path projections.

Despite the Fed projecting just one rate cut for 2026, Bloomberg chief economist Anna Wong sees room for a total of one hundred basis points in reductions next year. She expects weaker payroll growth and limited evidence of an inflation rebound. Powell’s term expires in May, and former President Trump is expected to appoint a chair who supports faster easing.

Key rate expectations include:

• Seventy-six percent probability of unchanged rates in January

• Twenty-four percent chance of a twenty-five-point cut

• Fed median outlook shows a single cut for 2026

• Some analysts still expect as much as one hundred basis points of easing

Bitcoin Rallies on Speech, Then Reverses as Fed Uncertainty Rises

Bitcoin spiked to ninety-four thousand dollars during Powell’s remarks, reflecting early optimism about future easing. However, the move quickly reversed, and the price slid to ninety-two thousand. This pattern mirrors the sharp swings seen after several FOMC events throughout the year.

The correction underscores how sensitive crypto markets remain to U.S. monetary policy. Traders are reassessing risk appetite as the Fed signals a pause, and macro expectations continue to dictate short-term momentum. With rate-cut uncertainty rising, digital assets may face additional volatility in the first quarter of next year.

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Prediction Markets: Hassett Far Ahead

In recent days, there has been significant activity on global prediction platforms Polymarket and Kalshi. According to the data:

• Hassett: 76%
• Kevin Warsh: 14%
• Christopher Waller: 10%

Hassett’s rise is especially notable. Hassett, who served as Director of the National Economic Council during the Trump administration, has long been considered a favorite. The main reason he is viewed as “crypto-friendly” in the crypto world is his role on Coinbase’s advisory council and the fact that he is known to hold a substantial stake in the exchange.

The assessment from Caitlin Long, CEO of Wyoming-based Custodia Bank, resonated within the crypto community:
“If Hassett really becomes Fed Chair, the influence of anti-crypto figures within the institution will be significantly reduced. We would see major changes at the Fed.”

A New Era in Crypto Policy?

Hassett’s rise brings back the possibility of a softening in the Fed’s approach to crypto assets. However, past examples show the importance of managing expectations. As remembered, Gary Gensler raised optimism when he arrived at the SEC with blockchain expertise, yet he maintained strict regulatory policies throughout his tenure.

If Hassett is chosen, there is no definitive picture that the Fed will fully open the door to crypto. However, compared to the current Fed structure, a more “experimental” stance and a more open approach to bank-crypto integration appear more likely.

Supervision Debates Continue Inside the Fed

While the new chair discussions continue, significant disagreements regarding supervisory and oversight mechanisms are emerging within the Fed. The institution’s recently announced “risk-focused supervision” approach has been viewed as too lenient by some internal figures. For this reason, it is clear that the new chair will take over a Fed already in the midst of a shift.

When Will the Announcement Come?

U.S. Treasury Secretary Scott Bessent recently stated, “It is highly likely that Trump will announce the new Fed Chair before Christmas,” increasing expectations even further.

All eyes are now on Washington. Hassett’s rising probability is being followed with great interest, especially by crypto investors and industry participants. In the coming weeks, we may witness critical developments that will directly shape the future of U.S. monetary policy and its relationship with crypto.

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Why Is the Crypto Market So Sensitive to Powell’s remarks?

Bitcoin’s decline indicates that traders are shifting into risk-off mode as they prepare for Powell’s comments. Rising macroeconomic uncertainty and mounting pressure have pushed investors to unwind leveraged positions and move into stablecoins. The upcoming speech may play a decisive role in determining the direction Bitcoin and altcoins will take in the coming weeks.

Why Is the Crypto Market Crashing Today?

Several key factors have triggered today’s sell-off:

• China FUD: Renewed negative statements from Chinese authorities have shaken market confidence.
• Whales Moving to USDT: Large investors have rotated into stablecoins to reduce risk ahead of Powell’s speech.
• Excessive Leverage: As BTC fell, heavily leveraged long positions triggered mass liquidations.
• Seasonal Trends: Historically weak performance in November often leads to early-December sell-offs.

Within just five hours, Bitcoin dropped from $91,300 to $86,300, erasing approximately $99.3 billion in BTC market capitalization and $40 billion from altcoins.

What Does Powell’s Speech Mean for Crypto?

Powell is expected to speak on the economy, inflation, unemployment, and the future of monetary policy. His remarks coincide with the official end of the Federal Reserve’s three-year quantitative tightening (QT) program — a shift that historically has been followed by bullish periods in the crypto market.

Markets are especially focused on the following topics:

• Signals of future interest rate cuts
• The possibility of renewed quantitative easing (QE)
• The Fed’s assessment of employment and inflation

If Powell hints that rate cuts are approaching, Bitcoin and altcoins could see a rapid relief rally. However, a more “hawkish” tone prioritizing inflation could deepen the downturn.

Meanwhile, major global economies such as Japan, Canada, and China have already begun easing monetary policy. A similar signal from the Fed could strengthen global liquidity expectations — and crypto markets are typically among the first to react to such shifts.

Rate Cut Expectations Are Rising

Recent data suggests the market has already priced in much of the expected December rate cut. The probability of a 25 bps cut currently stands at 87%. This expectation, combined with:

• Today’s PCE data
• ISM and ADP reports
• Jobless claims
• And Powell’s upcoming remarks

will help determine the next direction for the crypto market.

Market analysts summarize the situation as follows:

“Powell’s speech tomorrow could determine nearly all crypto pricing for the final weeks of the year. The Fed’s tone may trigger either a sharp rebound or a deeper correction.”

Conclusion

Federal Reserve Chair Jerome Powell’s speech on December 2 has become one of the most significant catalysts behind the growing stress in the crypto market. The massive sell-off that wiped hundreds of billions off Bitcoin’s market cap reflects investors’ cautious positioning. The messages conveyed in the speech — regarding rate cuts, inflation, and the Fed’s policy stance will be critical.

Depending on Powell’s tone, the market may either prepare for a strong recovery rally or face the increasing likelihood of retesting lower price levels. For this reason, December 2 stands out as a crucial turning point for the crypto market..

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Fed’s Barkin: “A December Rate Cut Is Not Guaranteed”

Speaking to reporters, Barkin stressed that expectations of a December rate cut are premature. Citing Jerome Powell’s earlier remarks, he noted that policymakers have not committed to any move and emphasized that the decision remains fully data-dependent. According to Reuters, Barkin underscored that “a December cut is far from certain.”

He explained that inflation is still above the Fed’s 2% target, though it does not appear to be accelerating. While he expects the unemployment rate to rise slightly, Barkin indicated that this shift does not signal a major deterioration in labor market conditions.

Data Gaps Increase Uncertainty

The temporary shutdown delayed the release of several important economic indicators, creating gaps in the information available to the Fed. Barkin acknowledged that the absence of these metrics makes it harder for officials to build consensus around the next policy steps. “It is difficult to align within the committee without convincing data,” he said.

Turning to the labor market, Barkin suggested that conditions may be weaker than headline numbers imply. Recent slowdowns in job postings and hiring momentum support this more cautious interpretation. While not signaling alarm, he emphasized the importance of upcoming data in shaping the Fed’s next move.

Market Expectations: FedWatch Shows a Split Outlook

The CME Group’s FedWatch Tool reflects a divided market ahead of the December meeting:

• 375–400 bps (current level): 53.4%

• 350–375 bps (25 bps cut): 46.6%

These probabilities show that markets are not fully convinced a cut will materialize, despite earlier optimism earlier in the year.

Barkin’s remarks reinforce the Fed’s cautious stance. While inflation has eased from its peak, it remains above target, and the labor market — though still resilient — may be softening beneath the surface. With crucial data still to come, December’s meeting is shaping up to be one of the most consequential policy moments of the year.

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What Is the Current Economic Outlook for the United States?

The current inflation rate in the United States is hovering around 3%. However, the FED’s target is to bring this figure down to approximately 2% annually. The interest rate applied to the U.S. dollar currently stands at around 4%. Considering the “stable but fragile” market conditions mentioned by the FED, it is expected that this rate may decline toward 3% in the near future.

The U.S. unemployment rate, which reached a historic peak of 14.9% in 2020, has since corrected to 4.3%. However, when examining the labor market over the past few months, little change is observed. Although progress continues, some FED officials consistently highlight that employment growth has slowed significantly — a trend that could lead to a higher unemployment rate.

Although the flames around tariffs seem to have cooled in recent months, tariff policies and global trade uncertainties will likely have a negative impact on inflation. This uncertainty appears poised to influence inflation in a positive direction.

You may also be interested in this article: Bitcoin’s Buy and Sell Ratio Turns Positive for the First Time: A Strong Bullish Signal

How Are the FED and Its Officials Interpreting the Situation?

• Philip Nathan Jefferson (FED Vice Chair):
  I supported the FOMC rate cut in October. Overall, the economy hasn’t changed much in recent months, but the lack of progress on inflation appears to stem from tariffs. Interest rates are close to neutral, so it’s better to move slowly.
• Michael Solomon Barr (FED Board Member):
  Progress has been made on inflation, but there’s still work to be done.
• Christopher J. Waller (FED Board Member):
  Stablecoins are not a threat to monetary policy.
• Beth M. Hammack (FED Bank President):
  I do not believe current economic data justify a rate hike. The people I’ve spoken with indicate that the labor market remains in an environment of low hiring and low layoffs. Keeping the Fed’s policy restrictive will help bring inflation down.

How Do Trump’s Trade Policies Affect the Economy?

Donald Trump referred to the ongoing legal process regarding tariffs and mentioned the need for new alternative plans. He stated that if the Supreme Court case ends unfavorably, an alternative plan is ready — though it would progress more slowly. FED officials may interpret the resulting price increases from these tariffs as renewed inflationary pressure. This is because, inevitably, import costs — and thus consumer prices — are likely to rise.

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Crypto and stock markets are focused on the signals that will come from this announcement. The potential end of quantitative tightening (QT) is particularly critical. Bitcoin, having filled its CME gap, could potentially rebound toward $120,000. Today is an important day as the Fed rate decision will be revealed.

Jerome Powell’s Speech: More Important Than the Rate Decision

After September’s 25-basis-point rate cut, FOMC officials indicated openness to further reductions. Powell stated that rate decisions will be taken on a meeting-by-meeting basis, depending on labor market conditions.

He also emphasized that the Fed’s QT program should end soon. Amid the ongoing U.S. government shutdown and limited economic data, investors are closely monitoring these remarks. September’s CPI data showed lower-than-expected declines in headline and core inflation, but annual CPI rose from 2.9% to 3%.

CME FedWatch data suggests that investors expect a 25-basis-point rate cut in December, signaling potential volatility for crypto markets.

Crypto Market and Bitcoin: What to Expect from the FOMC

According to popular analyst Michael van de Poppe, while a 25-basis-point Fed rate cut is likely, crypto volatility may surge today. Investors should avoid excessive leverage as prices could move sharply in either direction.

Bitcoin still presents valuable opportunities compared to other assets. Buying near the $112,000 dip is considered a strong entry point. Post-FOMC, BTC could gain momentum toward $123,000.

Key points for crypto investors today:

• Monitor BTC and altcoin price movements starting at 2:00 PM ET

• Analyze Jerome Powell’s guidance during the press conference

• Take precautions against volatility when using leverage

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Bitcoin Must Lead the Way

According to Cowen, any meaningful rally in altcoins is contingent upon Bitcoin (BTC) reaching new highs. He explained that if Bitcoin continues to climb through the fourth quarter, while monetary tightening ends and rate cuts begin, the alt/BTC pairs could experience a notable rebound.

“If Bitcoin rallies into the fourth quarter while alt/BTC pairs remain near their lows and the Fed ends its tightening cycle, we could see a strong surge in altcoins,” Cowen noted.

The Ideal Window: November to December

Cowen pointed out that historically, major altcoin movements tend to occur toward the end of the year, particularly in November and December. Referring to past market cycles in 2017, 2023, and 2024, he stated that the November-to-December window could once again align with the start of a new phase in the alt/BTC market.

Two Possible Outcomes

Cowen sees two potential scenarios unfolding:

1. A late-year rally that sparks an altcoin season.

2. A delayed cycle, pushing the next major altcoin run to 2026.

In both cases, he expects Bitcoin dominance to continue rising and advises investors to maintain a heavier weighting toward BTC in their portfolios.

“Why Hold Altcoins?”

Cowen emphasized that altcoins tend to underperform Bitcoin in both bullish and bearish market phases. “If altcoins continue to lose ground against Bitcoin, why hold them? Bitcoin offers lower downside risk and strong upside potential,” he said.

Ultimately, Cowen believes that as monetary tightening comes to an end and interest rates start to decline, conditions will gradually improve for altcoins. Until then, he concludes, “liquidity should flow to the king — Bitcoin.”

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According to Powell, data prior to the U.S. government shutdown suggested that economic growth was stronger than expected, with the economy returning to September levels. However, tariffs continue to increase price pressures, complicating the fight against inflation.

“The Fed must move carefully. Acting too quickly could leave the inflation battle unfinished,” Powell warned. He added that ending balance sheet expansion earlier would have made little difference, noting that balance sheet management remains a key tool of monetary policy.

Fed Nearing End of Balance Sheet Reduction

Powell indicated that the Federal Reserve could end its balance sheet reduction process in the coming months. This development comes amid signs of mild tightening in money markets. “We’re not far from our target, but there’s still some way to go,” he said, stressing that reserves remain abundant.

The Fed Chair also cautioned that a further decline in job openings could push unemployment higher. Research shows that the effects of monetary policy on employment and inflation take longer to materialize, making sudden policy shifts risky.

Powell warned that the slow pass-through of tariffs could pose a risk of persistent inflation, while declining to comment on gold or Bitcoin prices. “Inflation is driven by fundamental supply and demand factors,” he said, reaffirming the Fed’s data-dependent policy approach.

Powell’s remarks suggest that the Fed will remain data-driven and cautious in the months ahead. Markets are closely watching new signals regarding interest rates, balance sheet policy, and the inflation outlook.

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Bitcoin and altcoins remain in focus as FOMC minutes and Jerome Powell’s speech approach. Analysts remain optimistic that upward momentum may continue after these key macro announcements. 

The recent macro week kept the 10-year U.S. Treasury yield around 4.13%, while the U.S. Dollar Index (DXY) reached a two-month high near 99, limiting market recovery. 

Importance of FOMC Minutes and Powell’s Speech 

FOMC minutes will be released today, with some Fed officials speaking on October 8. Chair Jerome Powell will discuss: 

• Monetary policy and potential rate changes 
• Inflation trends and economic growth 
• Labor market weakness and U.S. government shutdown effects 
• Investors are closely monitoring these statements for their impact on Bitcoin and altcoin prices. 

Q&A for Snippet Potential: 

Q: How will FOMC minutes affect Bitcoin?
A: The minutes indicate interest rate and inflation expectations. Hawkish signals may lead to a BTC drop, while dovish signals could support a rebound. 

Safe Havens and “Devaluation Trade” 

The prolonged U.S. government shutdown is driving investors to safe havens. Gold and silver prices continue to rise, while Bitcoin is gaining attention as a dollar alternative. This environment, known as the “devaluation trade,” influences crypto investors’ strategies. 

Crypto Investor Tips: 

• Monitor interest rates and inflation data 
• Track DXY movements 
• Consider safe-haven assets like gold and silver 
• Adjust crypto portfolios for short-term volatility 

Macro data stagnation supports Fed’s rate policy, but FOMC minutes and Powell’s speech could quickly shift market sentiment. Investors should carefully plan both short- and long-term strategies. 

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Trump Criticizes Powell: “Slow and Inadequate”

Donald Trump frequently criticizes Powell for being cautious about lowering interest rates. In recent weeks, he tried to remove FED Governor Lisa Cook from the board over mortgage fraud allegations. He temporarily appointed Stephen Miran, Chairman of the White House Council of Economic Advisers, to fill the vacant seat. Analysts believe Trump aimed to exert political influence over the FED.

You May Be Interested In: US Senators Call for Trump Crypto Investigation

FED’s Cautious Stance on Interest Rate Policy

In his August statement, Jerome Powell said that inflation risks were rising, while employment risks were falling. This statement reflects the Fed’s cautious stance. It also points to the interest rate policies frequently criticized by Donald Trump. The Fed made its first interest rate cut of the year in early September. It announced that further cuts could be on the agenda between October and December.

Powell Emphasizes Independence

Speaking at the Greater Providence Chamber of Commerce in Rhode Island, Jerome Powell emphasized the Fed’s independence:

“We do not consider political factors when making our decisions. What matters is implementing the policy that will best serve the public in the medium term. We don’t engage in debates; we just do our job.”

Donald Trump’s social media move also resonated in the crypto and financial markets. The president’s criticism of Powell is high on investors’ agendas regarding interest rate and monetary policies.

The post Donald Trump and Jerome Powell: “You’re Fired!” Joke appeared first on Coin Engineer.