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The Fed announce rate cut by 25 bps to 3.50 to 3.75 percent. This will impact liquidity, Bitcoin, altcoins, and the 2026 macro outlook
Author: Chirag Sharma
Decem ber 10, 2025 The United States Fed delivered interest rate cut by 25 basis points, setting the benchmark range at 3.50 to 3.75 percent. This marks the third consecutive reduction of the year and the lowest rate environment seen since early 2023. The decision was widely expected by markets, although internal divisions within the Fed signaled caution about the pace of future easing.
The reduction makes borrowing cheaper for households and businesses, supporting credit flows into growth sectors. However, the updated dot plot suggested fewer rate cuts ahead, indicating that policymakers are not fully committed to aggressive easing in 2026. The final meeting of the year now shifts attention to how inflation, employment, and consumer data could influence upcoming decisions.
The rate cut delivered a significant liquidity boost across global markets. Bitcoin, which was trading near 92,000 dollars before the announcement, saw a brief dip as traders braced for uncertainty but rebounded strongly after the decision. Historically, lower interest rates have supported Bitcoin and other risk assets due to increased borrowing appetite and reduced treasury yields.
Ethereum outperformed the broader crypto market, climbing above 3,300 dollars with gains nearing 7 percent. Capital rotation also pushed Cardano, Solana, and several mid cap altcoins higher, driven by traders seeking higher beta opportunities during easing cycles.
Market analysts noted that a breakout above 96,500 dollars for Bitcoin could invalidate recent downtrends. Still, thin liquidity in altcoins raises the risk of sharp swings. The liquidity boost from the Fed could set the stage for a strong crypto rally, but only if inflation stays stable in early 2026.
In the weeks before the December policy meeting, the Fed faced a complex landscape shaped by inflation concerns and data gaps caused by the recent government shutdown. Officials lacked full visibility into employment and consumer price trends, forcing decisions based on fragmented indicators.
Even so, markets remained confident that a 25 bps cut was coming. The CME FedWatch tool showed an 89.9 percent probability of a cut as traders priced in continued easing. Consumer spending stayed resilient in the fourth quarter, and the labor market held firm with consistent job additions.
Behind the scenes, political debate added tension. Discussions around potential new Fed leadership in a post Powell environment raised questions about the direction of monetary policy in 2026. Some economists warned that a more conservative approach may emerge if inflation reaccelerates due to AI driven productivity surges or expansionary fiscal policies.
The December buildup highlighted a central bank attempting to guide the economy toward a soft landing while navigating uncertainty in a rapidly shifting macro environment.
Looking ahead, the Fed’s final rate cut of 2025 sets the tone for early 2026. If inflation continues to moderate and unemployment remains low, additional cuts may follow. A slower path could emerge if data strengthens too quickly, creating fresh inflation pressure.
Crypto markets will keep a close eye on these signals. Historically, easing cycles have aligned with improved Bitcoin performance and stronger altcoin seasons. The December move may be the first step in a broader liquidity wave.
For now, markets are positioned to react positively to any signs of continued easing as capital flows return to higher risk sectors.
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