Senate Committee unveils crypto market structure bill draft
Key takeaways
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The Fed’s Dec. 9-10 meeting carries unusual weight as markets wait to see whether another rate cut will arrive before Christmas, shaping bonds, equities and crypto.
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After two cuts in 2025, rates now sit at 3.75%-4.00%. Labor weakness and softer inflation support further easing, but officials remain divided because inflation risks have not fully cleared.
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A cooling job market, easing inflation and the end of quantitative tightening could justify another reduction and align with year-end liquidity needs.
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Sticky inflation, gaps in economic data caused by the government shutdown and a divided Fed may push policymakers to keep rates unchanged this December.
When the US Federal Reserve meets on Dec. 9-10 to decide on interest rates, it will not be just another routine gathering. Markets are watching closely to see what direction policymakers choose. Will the Fed cut rates again before the holidays? A pre-Christmas Eve reduction could send waves through bonds, stocks, credit markets and crypto.
This article explains why the Fed’s pre-Christmas meeting is significant and outlines the factors supporting or opposing a potential rate cut. It also highlights what to watch in the coming weeks and how a Fed move could affect crypto and other financial markets.
The background of a December rate cut
Central banks typically cut rates when inflation is easing, economic growth slows or financial conditions become too tight. In late October, the Federal Reserve lowered rates by 25 basis points, setting the federal funds target range at 3.75%-4.00%, its lowest level since 2022. The move followed another 25-basis-point cut in September 2025, making it the Fed’s second rate reduction of the year.
The move came amid clear signs of a cooling labor market. October recorded one of the worst monthly layoff totals in more than two decades, according to multiple labor-market reports, reinforcing concerns about weakening job conditions. The Fed’s October statement echoed this trend, noting that risks to employment had increased even as inflation remained somewhat elevated.
At a press conference, Fed Chair Jerome Powell stressed that a December cut is “not a foregone conclusion.” Yet economists at Goldman Sachs still expect a cut, pointing to clear signs of labor market weakness. Fed officials remain divided, with some emphasizing inflation risks and the limited room for further easing.
A December rate cut is possible, but it is not guaranteed.
Factors supporting a potential rate cut
There are several reasons the Fed may decide to cut rates:
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Cooling labor market: Private sector data shows softer hiring, rising layoffs and a slight increase in unemployment.
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Moderating inflation: Inflation is still above target but continues to trend lower, giving the Fed more flexibility to ease policy.
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Ending quantitative tightening: The Fed has announced it will stop reducing the size of its balance sheet beginning Dec. 1.
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Pre-holiday timing: A rate cut would align with year-end liquidity needs and help set expectations for 2026.
Arguments for the Fed to postpone action
Several factors suggest the Fed may delay a rate cut in the near future:
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Sticky inflation: According to the Fed’s latest statement, the inflation rate remains “somewhat elevated.”
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Data vacuum: The US government shutdown has delayed key employment and inflation reports, making policy assessments more difficult.
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Committee division: Federal Reserve officials are split on the appropriate path forward, which encourages a more cautious approach.
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Limited room for easing: After multiple cuts this year, some analysts argue that policy is already close to a neutral level.
Did you know? In March 2020, the Fed cut interest rates to near zero to respond to the COVID-19 crisis. It lowered rates by a total of 1.5 percentage points across its meetings on March 3 and March 15.
What to monitor before December
These factors are likely to shape the Fed’s upcoming policy decision on rate cuts:
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Nonfarm payrolls and unemployment: Is the job market continuing to slow?
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Inflation data: Any unexpected rise in inflation will reduce expectations for policy easing.
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Financial conditions and market signals: Are credit spreads widening, and is overall market liquidity tightening?
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Fed communications: Differences of opinion within the Federal Open Market Committee (FOMC) may influence the outcome.
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External shocks: Trade developments, geopolitical risks or sudden supply disruptions could shift the Fed’s approach.
Did you know? US stocks have historically returned about 11% in the 12 months after the Fed begins cutting rates.
How a Federal Reserve cut may impact crypto
Fed rate cuts increase global liquidity and often push investors toward riskier assets like crypto in search of higher returns. Bitcoin (BTC) and Ether (ETH) tend to benefit from stronger risk appetite and rising institutional inflows. Lower decentralized finance (DeFi) borrowing rates also encourage more leverage and trading activity. Stablecoins may see greater use in payments, although their yield advantage narrows when rates fall.
However, if a rate cut is interpreted as a signal of recession, crypto may experience equity-like volatility. Markets might see an initial boost from easier liquidity, followed by a pullback driven by broader macro concerns. If global financial conditions loosen instead, the environment could support further crypto demand.
Lower borrowing costs make it easier for people and institutions to take investment risks, which can draw more interest toward digital assets. As more money flows into the sector, crypto companies can build better tools and services, helping the industry connect more smoothly with the rest of the financial system.
Did you know? When the Fed cuts rates, short-term bond yields usually fall first, creating opportunities for traders who track movements in the yield curve.
Consequences of a Fed rate cut on other financial sectors
Here is a look at the potential effects on major asset classes if the Fed cuts interest rates:
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Bonds and yields: Short-term yields will likely decline as markets adjust their expectations. The yield curve may steepen if long-term yields remain stabler than short-term ones, which can signal confidence in future growth. If the cut is viewed as a sign of recession risk, long-term yields may fall as well, resulting in a flattening or even an inversion of the curve.
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US dollar and global FX: A rate cut generally weakens the dollar because interest rate differentials narrow. This often supports emerging markets and commodity-exporting countries. If the cut is driven by concerns about economic growth, safe-haven demand may temporarily push the dollar higher.
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Equities: A pre-Christmas Eve rate cut could spark a rally in US stocks if investors see it as a sign of confidence in a soft landing. A soft landing refers to cooling inflation alongside a stable labor market. If the cut is motivated by growth worries instead, corporate earnings may come under pressure, and defensive sectors could outperform cyclical ones.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The Czech National Bank (CNB), the central bank of the Czech Republic, announced on Thursday the purchase of cryptocurrencies worth $1 million for the first time to test a digital asset reserve and gain “practical experience” in handling digital assets.
CNB’s reserves will include Bitcoin (BTC), one US dollar-pegged stablecoin and one tokenized bank deposit, according to the announcement.
The bank said that while the test is intended to study crypto and prepare the bank for international adoption to remain globally competitive, it is not planning to adopt a digital asset reserve in the “near future.” CNB governor Aleš Michl said:
“It is realistic to expect that, in the future, it will be easy to use the koruna to buy tokenized Czech bonds and more — with one tap an espresso; with another an investment such as a bond or another asset that used to be the preserve of larger investors.”
The Bank also launched the CNB Lab Innovation Hub, an initiative to test blockchain and other financial technologies for use in commerce and to help adapt monetary policy to rapid technological change.
The announcement reflects the growing institutional adoption of digital assets by central banks and nation-states, as the world shifts to onchain, internet-first finance.
Related: Taiwan premier promises Bitcoin reserve assessment report by the end of 2025
CNB inches toward crypto
The CNB began exploring BTC in January to diversify its international asset reserves, following the pro-crypto regulatory pivot in the United States.
Michl proposed purchasing up to $7.3 billion BTC, or 5% of the bank’s reserves, to seed a Bitcoin reserve during the same month, but the plan wasn’t approved by the CNB board.
“An asset under consideration is Bitcoin. It currently has zero correlation to bonds and is an interesting asset for a large portfolio,” Michl said at the time, adding that BTC could “one day be worth either zero or a huge amount.”
In July, the CNB added 51,732 shares of Coinbase, a major crypto exchange, to its investment portfolio, valued at about $18 million at the time, and over $15.7 million at the time of this writing.
Magazine: US risks being ‘front run’ on Bitcoin reserve by other nations: Samson Mow
French authorities have reportedly lifted Telegram CEO Pavel Durov’s travel ban amid an ongoing investigation into the messaging platform.
Durov had been ordered to remain in France following his arrest in Paris in August last year, facing multiple charges related to his operation of Telegram.
Durov was previously granted temporary exemptions, and French authorities have now fully lifted restrictions on his travel, Bloomberg reported on Thursday.
As part of the latest decision, dated Monday, officials also removed the requirement for Durov to regularly check in at a local police station, the report said, citing a person familiar with the matter.
Investigation still ongoing
The report did not mention any details regarding the French investigation into Telegram, hinting that the case is still active.
According to a statement on preliminary charges by France’s Prosecutor’s Office, Durov was last year accused of facilitating a platform that enables illicit transactions. The prosecutors said the Telegram CEO is facing up to 10 years in prison, in addition to a fine of $550,000.
Telegram and Durov have repeatedly denied the accusations, highlighting the messenger’s compliance with industry standards and the laws of the European Union.
While denying the accusations, Durov has consistently criticized the French government, including French President Emmanuel Macron, regarding what Durov has described as the country’s political trajectory around censorship.
“Emmanuel Macron isn’t making the right choices. I’m very disappointed. France is getting weaker and weaker,” Durov said in an interview with French outlet Le Point in June.
Related: Telegram’s Pavel Durov unveils decentralized AI network built on TON
In October, Durov warned of the potential consequences of the EU’s Chat Control proposal, urging the world to fight against the “dystopian” measures proposed by the EU.
“Germany is persecuting anyone who dares to criticize officials on the Internet. The UK is imprisoning thousands for their tweets. France is criminally investigating tech leaders who defend freedom and privacy,” Durov wrote in an X post on Oct. 9.
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