Is a 100 basis point rate cut still a bear trap? How does the Fed's internal discord influence the crypto market

Federal Reserve Board member Milan recently stated that the Fed should cut interest rates by more than 100 basis points this year. This remark immediately drew market attention—whether the rate cut expectations can be realized has become the biggest suspense at present. But what is more worth exploring is that this reflects deep internal divisions within the Federal Reserve, and how these disagreements directly impact the crypto market.

The “Radical Faction” of the Federal Reserve Speaks Out

Milan’s core logic is quite clear: the core inflation rate is approaching the Fed’s target, current policies are restrictive, and are dragging down the economy. Implicitly, maintaining high interest rates is no longer necessary and could harm employment and growth.

This view is not unfounded. According to the latest data, the unemployment rate has risen to 4.6%, and key industries such as manufacturing and information technology continue to shrink, with noticeable cracks appearing in the job market. Against this backdrop, Milan’s advocacy for aggressive rate cuts seems reasonable.

However, an interesting phenomenon has emerged: there are clear disagreements within the Fed regarding rate cuts. Milan represents the “rate cut radicalists,” while others like Federal Reserve Bank of New York President Williams believe that current monetary policy is “at an ideal stance,” and Boston Fed President Collins openly states that the rate cut decision process is “full of struggles.”

Political pressure is changing the Fed’s decision-making ecosystem

Behind these disagreements are not only differences in interpreting economic data but also reflect rising political pressures faced by the Fed. According to relevant reports, the Trump administration has challenged the Fed’s independence by nominating allies to the Federal Reserve Board and publicly pressuring for rate cuts to reduce government debt costs. Milan himself was promoted to Fed Board member in September 2024 and is viewed as part of the “rate cut radicalists.”

This indicates that the Fed’s decision-making is gradually shifting from “data dependency” to “political pressure environment.” A warning sign is that the government shutdown caused the absence of official data for October-November, forcing the Fed to rely on private data like ADP’s “blind flight,” whose accuracy is questionable. Making rate cut decisions under such uncertainty is inherently risky.

The Crypto Market Is Experiencing a “High Volatility” Era

For the crypto market, this internal Fed discord directly translates into price volatility. Reports indicate that during a crash in December 2025, Bitcoin plummeted from $92,000 to $80,600 within 24 hours, with a single-day drop of over 9.1%, and total liquidation on the network reaching $19.2 billion. The trigger for this slaughter was precisely the policy disagreements among top Fed officials.

This reveals a reality: the crypto market is highly sensitive to Fed policy signals, and any change in internal communication can trigger intense fluctuations. When dovish voices like Milan speak out, the market tends to be bullish in the short term; when other officials express caution, panic ensues.

Can a 100 basis point rate cut be realized?

This is the key question. According to the latest dot plot, the Fed plans only one rate cut in 2026. This is a significant gap compared to Milan’s advocacy for “more than 100 basis points”—which would imply four 25-basis-point cuts—while the official expectation is only one.

The huge discrepancy between expectations and reality is the fundamental cause of market volatility. The market swings between “rate cut expectations” and “actual rate cuts,” leading to sustained high volatility in crypto assets.

Multiple Key Variables in 2026

According to analysis from relevant sources, several key events in 2026 could influence the Fed’s policy direction:

• January 15: MSCI’s rating of MicroStrategy is announced
• May 15: Powell’s term as Fed Chair ends, new chair takes over (currently a fierce contest, Haskett leading)
• April 27: Las Vegas Bitcoin Conference
• End of May: Possible renewed hype over rate cut expectations
• November 3: US midterm elections

The combined effects of these events will determine whether the Fed will truly implement aggressive rate cuts in 2026, thereby impacting the entire crypto market trajectory.

Summary

Fed Board member Milan’s “100 basis point rate cut” statement reflects deep internal disagreements over monetary policy direction. These disagreements are driven by both economic fundamentals (inflation easing, weakening employment) and political pressures (government pushing for rate cuts). For the crypto market, this means 2026 will be a year of repeated “policy expectations vs. actual implementation” battles, with high volatility likely becoming the norm.

The key question is: how aggressive will the Fed ultimately be? Can the official expectation of one rate cut be upgraded to the market’s anticipation of four? The answer depends not only on economic data but also on the magnitude of political pressure. Under such uncertainty, crypto market participants need to enhance risk management awareness and remain alert to the potential for policy signals to change repeatedly.