Federal Reserve's "Silent Protest" and Rate Cuts: Is the Crypto Market Standing at the Beginning of a New Cycle?

This is December 10, 2025. The Federal Reserve has cut interest rates for the sixth time since September 2024, lowering the federal funds rate target range to 3.50% to 3.75%. However, what is more noteworthy is the emergence of the strongest internal opposition in the Fed in six years: three explicit dissent votes and “silent dissent” hidden in the “dot plot.”

01 Divergence Between Hawks and Doves

The Federal Reserve’s monetary policy decision-making circle is currently facing unprecedented division. At the December 10, 2025 meeting, 3 out of 12 Federal Open Market Committee members voted against the 25 basis point rate cut, marking the first such dissent since September 2019.

Specifically, Fed Governor Stephen Milan advocated for a one-time 50 basis point cut, while Chicago Fed President Charles Goolsby and Kansas City Fed President Jeffrey Schmid believed rates should remain unchanged.

This division is not just a numerical difference; it represents a fundamental disagreement within the Fed about the outlook for the U.S. economy. Michael Flanagan, Chief Economist at the American Mortgage Bankers Association, pointed out that inflation remains well above the Fed’s target, but the employment market is weakening, allowing both sides to find arguments supporting their positions.

“This is a heated debate,” commented a Wall Street analyst after observing the meeting results. “The Fed is caught in a dilemma: managing inflation still above target while dealing with a weakening employment market.”

02 Silent Opponents

In addition to the three officials who publicly dissented, there are more “silent dissenters” hidden within the Fed.

The dot plot released on December 11 shows that up to six Fed policymakers forecast that the benchmark interest rate should remain in the 3.75% to 4% range at the end of 2025, levels prior to rate cuts. Considering that at least four of these six officials do not have voting rights at this meeting, this high-rate forecast is viewed by the market as silent opposition.

Former Philadelphia Fed President Patrick Harker even openly stated, “I would have been one of the silent dissenters; I believe rate cuts are wrong.”

03 Not Just Rate Cuts: A $40 Billion “Mini QE”

What was truly surprising about this Fed meeting was the adjustment to balance sheet operations. Alongside the rate cut announcement, the Fed quickly launched a short-term Treasury bond purchase program called “Mini QE.”

According to the resolution, the Fed will start purchasing approximately $40 billion of short-term Treasury bills each month from December 12, aiming to maintain ample reserve levels. Powell explicitly stated that the bond-buying scale will remain “high for several months” and then be “significantly reduced,” with the goal of completing the program by April 15, 2026.

This operation is markedly different from the traditional quantitative easing (QE) implemented after the financial crisis. It mainly targets short-term bonds, aiming to maintain banking system liquidity rather than suppress long-term yields.

04 Raised Rate Cut Threshold and Uncertain Future Path

Powell stated at the press conference that the federal funds rate is “now within a broad range of estimated neutral rates,” implying that monetary policy is approaching a moderate level. This statement, along with hawkish remarks, is generally interpreted by the market as a signal that the Fed will continue to pause rate cuts.

Data from the CME FedWatch Tool shows that the market now assigns a 77% probability that the Fed will keep rates unchanged at the January 2026 policy meeting.

According to the Fed’s economic projections, officials expect the median federal funds rate to remain at 3.4% in 2025 and 3.1% in 2026. This suggests that, compared to current rates, the market expects only one more 25 basis point rate cut over the next two years.

05 Leadership Changes and Policy Uncertainty

The Fed’s decision coincides with a critical period of leadership transition. Powell’s term will end in May 2026, and markets widely expect Trump to announce his successor within a few weeks.

Trump has publicly stated that whether to support rate cuts will be a “touchstone” for evaluating the next Fed Chair. He has also repeatedly called for the Fed to lower rates below 2% to provide more stimulus to the economy.

The most likely successor to Powell is White House National Economic Council Chair Kevin Hasset, who has explicitly stated that if he becomes the next Fed Chair, he will not succumb to political pressure but will act based on his own judgment.

06 Immediate Market Reactions to Rate Changes

Against the backdrop of the Fed shifting to a more dovish stance, the cryptocurrency market has shown a sensitive yet positive response. Data from Gate.io indicates that major tokens generally rose after the decision was announced.

Bitcoin (BTC) increased about 2.5% within 24 hours of the announcement, briefly breaking through key resistance levels, reflecting market expectations of improved liquidity.

Ethereum (ETH) followed the rally, rising approximately 2.8%, with its spot ETF prospects and rate cuts forming a double positive.

Solana (SOL) performed even better, surging over 4%, reflecting the amplification effect of high-beta cryptocurrencies during liquidity improvements.

It is worth noting that rate cuts and the “Mini QE” directly increased market liquidity expectations, while internal divisions within the Fed also added uncertainty to future policy paths, which could become a significant driver of volatility in the crypto markets.

According to the latest data from Gate.io on December 12, the market sentiment remains positive, with major cryptocurrencies maintaining steady gains during Asian trading hours.

07 Future Outlook: How Will the Rate Cut Cycle Affect Crypto Markets

As internal disagreements within the Fed intensify and leadership transitions are imminent, future monetary policy paths are becoming highly uncertain. The market generally believes Powell may pause after this rate cut, with further policy adjustments likely waiting until a new chair is appointed.

Fed Governor Stephen Milan’s term ends in late January 2026, and whether he will be reappointed remains uncertain, adding to future policy uncertainty.

For the crypto market, Fed monetary policy decisions directly impact dollar liquidity and global risk appetite. The hawkish signals seen in the dot plot suggest that markets should not expect significant rate cuts next year, which could limit gains in risk assets like cryptocurrencies.

Meanwhile, internal divisions within the Fed and uncertain leadership changes may keep monetary policy on hold in the coming months, possibly leading the crypto market into a period of consolidation, awaiting clearer fundamental signals.

Future Outlook

JPMorgan analysts believe the Fed “will continue to take measures to prevent the economy from slipping into recession,” but the increasing policy disagreements make each meeting unpredictable.

Markets initially expected a more hawkish rate cut, but the actual outcome was more dovish than anticipated. In the dot plot, six members opposed rate cuts, but four of them lack voting rights, a lower proportion than market expectations. The large-scale Treasury bond purchase plan announced alongside the decision has been interpreted by Bloomberg and others as a clear dovish signal.

Some analysts are beginning to question whether the actual rate cuts in the future will exceed the 25 basis point shown in the dot plot. Former NY Fed President William Dudley stated, “In the first half of next year, the Fed will enter a period of watchful waiting, with a clear slowdown in the pace. The political drama surrounding Fed independence will officially unfold.”