All Eyes on the Critical FOMC Meeting
Last week began with the first day of December and proved to be an unpleasant Monday for digital assets. However, on Tuesday and Wednesday, pricing expectations regarding the U.S. Federal Reserve (FED) cutting interest rates generally influenced cryptocurrencies, and the losses from the week’s opening were recouped. What remained were the traces left by volatility.
After the first five trading days, which reflected our view that December would be a month of seeking balance following the challenging months of October and November, attention is now turning more to macro developments. The Federal Open Market Committee (FOMC) decisions to be announced on Wednesday will be a decisive dynamic for the coming period.
We remain relatively optimistic, but we believe that strong gains may be limited in December, which includes special pricing models such as Christmas and New Year’s, and that the balancing process will continue next week. Rather than describing this as a “strong rise,” it would be more accurate to describe it as a “balanced upward movement with interim corrections.” Again, it will be necessary to be prepared for rapid price changes that occur from time to time within short periods.
Alongside this view, which we express taking market behavior into account, it is also necessary to mention a pattern in cryptocurrencies. According to our analysis, Bitcoin exhibits a “persistent” structure in the short term. In other words, prices carry a “memory,” convey information, and contain a fractal fabric where rises follow rises and falls follow falls. Therefore, we believe that, despite occasional downward corrections, the rise in digital assets may continue for some time. We express this view taking into account our expectations regarding the underlying dynamics. Below, we detail some macro dynamics that may support or hinder this view from a weekly investment horizon and perspective.
December 2 – Fed Chair Powell’s Speech
Following statements by some Federal Open Market Committee (FOMC) members that strengthened the possibility of an interest rate cut on December 10, we will hear a speech by US Federal Reserve (Fed) Chairman Powell on Tuesday this week. The event will be a panel discussion organized by Stanford University on the contributions of economic policies. While we do not expect the Chairman to discuss current monetary policy, given that the event will include a Q&A session, there is a possibility that Powell may touch on certain points related to recent developments. Therefore, we will closely monitor his remarks, as any hints about the FOMC meeting scheduled for December 10 could impact the markets. It will be interesting to see how the Chairman interprets the statements of FOMC members such as Williams, Waller, and Daly, who are leaning toward interest rate cuts.
December 10 – Bated Breath, Eyes on the FOMC Meeting…
The US Federal Reserve (Fed) will hold its final Federal Open Market Committee (FOMC) meeting of the year on December 9-10, with decisions announced on December 10. The FOMC is expected to cut its policy interest rate by 25 basis points (according to the CME FedWatch Tool at the time of writing this report), and the decisions, justifications, and statements made will be of critical importance to global markets.
In August, the Bureau of Labor Statistics (BLS) revised the largest backward-looking nonfarm payrolls change since Covid-19 in 2020, raising doubts about the strength of the labor market. Powell changed his rhetoric following this sharp shift in the labor market and drew attention to the weak employment market in his statements at the end of August. Following this message, markets priced in interest rate cuts, and the Fed also cut interest rates. However, at the press conference following the September FOMC meeting, Powell stated that a new rate cut in December was not a foregone conclusion, which put rate cut expectations on hold. In the following weeks, important FOMC members such as Williams, Waller, and Daly sent messages about rate cuts, bringing this agenda back to the forefront, and markets began to view a new rate cut as almost certain.
In summary, we witnessed sharp shifts in market expectations regarding the December meeting. At this stage, we believe several scenarios are emerging for the FOMC’s next move. First, it is important to note that we have not previously seen such a clear divergence of views among FOMC members during Powell’s tenure. Members hold differing views on the priority of inflation and employment. Inflation is not rising rapidly in the world’s largest economy, but it is far from the Fed’s target level of 2% and is not showing any meaningful decline. The employment market is cooling, but there is no chaotic picture on that front either. It is this equation and gray area that is causing members to disagree and making decision-making truly difficult. At this point, we believe the Board must decide which is more damaged (employment or inflation) and which would be easier to repair. It will be crucial for Powell and his team to find common ground on this issue.
Under these assumptions, in line with the style of the Fed and Powell, we believe the first of the scenarios we mentioned will be “cut rates to meet market expectations, speak cautiously about the future.” Powell has used this approach in previous years and even at the last meeting, sending the message that “we are cutting rates, but we will most likely wait for the future.” In a way, this scenario could be called the “hawkish rate cut” model. We can say that the second and alternative route is to keep rates steady and signal a cut for the January meeting, when more data will be available. Powell could use the disruption in data flow due to the government shutdown as an excuse for this. However, on this path, the Chairman will need to convince the members who favor a cut, plunging the markets into a gray period for another seven weeks.
Both possibilities have benefits and negative outcomes. Our expectation is largely that the FOMC could decide on an interest rate cut. However, with the Committee itself so divided, we cannot approach this as comfortably as the markets’ expectations and argue that we must be open to surprises.
Now, to better prepare investors for FOMC day, we will detail what to expect step by step on December 10.
Decision Day
1- Will interest rates be cut as expected? Let’s briefly summarize the process awaiting us on the evening of December 10. First, markets will focus on whether the Fed will cut its policy rate. As mentioned above, according to the CME FedWatch Tool, markets are expecting a 25-basis-point cut at the time of writing this report. However, it is important to remember that these expectations may change with new developments.
Source: Bloomberg
“FOMC1 image to be added”
If the Fed cuts rates by 25 basis points as expected, we do not expect a new pricing in the markets as a result of this decision. If it keeps rates unchanged, we may see a reaction where the dollar gains value, risk appetite decreases, and instruments considered relatively risky, including crypto assets, lose value. On the other hand, in another surprise scenario, if the Fed cuts interest rates by 50 basis points, we may see this reflected much more positively in digital assets. However, we consider this possibility to be very weak. An interest rate hike is not one of the options on the table.
2- Economic Projections and Dot Plot Chart:
The FOMC publishes forecasts on certain economic indicators and how the policy rate may change in the coming periods at four of its eight meetings throughout the year. The meeting on December 9-10 will be one of these. Therefore, these documents, which will be published simultaneously with the interest rate decision, will be another important set of information affecting prices.
The Fed’s view on the health of the economy is, of course, very important. We can understand this perspective by examining how officials expect macroeconomic data to change in the coming period. Changes in the projections will be closely monitored, and in particular, possible updates to the PCE price index (the indicator the Fed uses to track inflation) will provide information about the path of interest rate cuts. A strong upward revision could mean that the Fed will not be overly hasty with interest rate cuts in the coming period, while a downward revision could imply relatively faster cuts. We would not be surprised to see a slight upward revision in unemployment and growth data, and a downward revision in inflation figures.
Source: Bloomberg
The same document will include a table known as a “dot plot,” which shows FOMC members’ projections for changes in the policy interest rate. In the image above, you can see the average expected rates from the dot plot published at the September meeting. Here too, a downward revision could complete the equation of digital assets gaining value due to weak dollar demand. Although unlikely, an upward revision could have the opposite effect.
Source: Bloomberg
At this point, let’s delve into the details of another topic that could impact the markets. Investors will be wondering what kind of interest rate policy the Fed will pursue next year and hope to find an answer in the dot plot. Finally, as can be seen in the relevant table published after the September meeting, the median expectation of FOMC officials was that the policy rate would be 3.25-3.50 at the end of next year. You can see this as 3.375% in panel b of the charts above (the bottom of the relevant charts). So, assuming an interest rate cut on December 10, the Committee itself expects one 25 basis point cut in 2026. However, we believe this will change and expect it to imply a greater number of meetings where interest rate cut decisions will be made.
It would also be useful to note that, according to a Bloomberg survey conducted between November 28 and December 3 with the participation of 41 economists, the vast majority of participants believe that the FOMC will follow up its interest rate cuts with two quarter-point cuts starting in March 2026. Next week’s cut will be a continuation of the rate cut decisions made at the last two policy meetings in September and October.
3- Fed Chair Powell’s Presentation: Half an hour after the FOMC statement, policy interest rate decision, economic projections, and dot plot table are announced, all eyes will turn to Chair Powell’s press conference. Powell will first explain the decisions and their rationale from behind the podium and then move on to the section where questions from the press will be accepted. Volatility in prices may increase during this segment.
The significance of the Chairman’s speech will vary depending on the nature of the decisions outlined above. However, Powell’s messages regarding how the path of future interest rate cuts will take shape will be critical. If Powell signals that significant interest rate cuts could be made in 2026, we will see a positive impact on digital assets. In the opposite scenario, pressure may arise. It should also be noted that Powell’s term ends in May 2026, and it is clear that Trump will not renominate him. In fact, he is expected to announce his nominee before Christmas. Therefore, it would be more accurate to evaluate Powell’s statements within this projection and investment horizon.
Other Important Macroeconomic Indicators or Developments
December 9 – Job Openings and Labor Turnover Survey (JOLTS); Shows the number of job openings during the reported month, excluding the agricultural sector. This JOLTS data is closely monitored as job creation is an important leading indicator of consumer spending, which accounts for a large share of overall economic activity. It is released monthly, approximately 35 days after the end of the month. A lower-than-expected release is expected to have a positive impact on cryptocurrencies. Due to the government shutdown, this data will be released with a 7-day delay for October. The September JOLTS data will not be released.
December 9 – ADP Weekly Employment Change; This data was first published by Automatic Data Processing, Inc (ADP) in October 2025. It is high-frequency private sector employment data based on a four-week moving average and tends to be more volatile than the monthly ADP Employment Report. It is also known as NER Pulse, short for National Employment Report. In summary, it shows the estimated average weekly change in the number of people employed over the previous four weeks, excluding the agricultural and public sectors. It is released on the first Tuesday of each week, approximately two weeks after the end of the four-week period. The release of these data is skipped in weeks when the monthly ADP Employment Report is published. Job creation is closely monitored because it is an important leading indicator of consumer spending, which constitutes a large part of overall economic activity. During periods when market pricing is heavily influenced by the Fed’s monetary policy decisions, data exceeding expectations is expected to have a negative impact on digital assets, while figures below expectations are expected to have a positive impact.
December 11 – Initial Jobless Claims; This shows the number of people who filed for unemployment insurance for the first time during the previous week and is published weekly, usually on the first Thursday after the week ends. Although it is a lagging indicator, the number of unemployed is considered an indicator of overall economic health because consumer spending is highly correlated with labor market conditions. Market impact can vary from week to week, and market participants tend to focus more on this data when they are more sensitive to recent developments or when macro indicators related to the labor market are at extreme levels.
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