Written by: Oliver, Mars Finance
At 3:00 AM Beijing time on December 11, 2025, Federal Reserve Chairman Jerome Powell pressed the button that the market had already priced in: a 25 basis point interest rate cut.
The subsequent events should have unfolded according to the script of the crypto market: liquidity was released, the dollar index plummeted, and Bitcoin surged to the $100,000 mark. In fact, that's exactly what happened for the first 15 minutes—Bitcoin surged violently to $94,476 in an instant, and the notification sounds of short positions being liquidated echoed across the network.
However, the euphoria lasted less than an hour. As Wall Street traders deciphered the Federal Open Market Committee (FOMC) statement and the Summary of Economic Projections (SEP) line by line, market sentiment reversed precipitously. Bitcoin not only gave back all its gains but also steadily declined to $91,384 in the following hours, forming a classic inverted V-shaped consolidation pattern.
Why did major funds choose to flee despite the seemingly double benefit of "interest rate cuts + bond purchases"?
This is not a simple case of "profit-taking," but rather a game of timing caused by algorithms misinterpreting headlines and humans correcting their logic . When you break down the three core details of this FOMC meeting—the upward revision of GDP expectations, the fake QE, and the unprecedented internal split—you will find that $94,000 is not the starting point of a bull market, but rather a trap set by macroeconomic fundamentals for the bulls.
Algorithmic Illusion: A $40 Billion "Pseudo-QE"
Looking back at the surge at 3 a.m., the core driver was not the interest rate cut itself (after all, the CME FedWatch had already given an 88% probability of prediction), but a highly misleading breaking news: the Federal Reserve announced that it would purchase $40 billion of short-term Treasury bonds per month.
For high-frequency trading algorithms and clickbait media, the keyword extraction logic is very simple: "Fed" + "Buying Bonds" = "QE" = "Liquidity Injection".
As a result, the machines were instantly flooded with buy orders. The market mistakenly believed that the Federal Reserve's simultaneous interest rate cut and quantitative easing was a double dose of good news.
But the devil is in the operational details subsequently released by the New York Fed. This was not QE (quantitative easing) aimed at lowering long-term interest rates and stimulating the economy, but rather RMP (reserve management purchases) targeting only short-term Treasury bonds.
The details show that the Federal Reserve bought bonds because the banking system's reserve balances had fallen to the edge of "adequate levels," and to prepare for potential liquidity withdrawals due to the upcoming April tax season. In other words, the $40 billion was merely a patch to repair the "pipes" of the interbank market, aimed at preventing a surge in repurchase rates from causing a financial system malfunction, rather than injecting liquidity into a pool of risky assets.
The first round of valuation correction began when human traders realized that the funds would be locked in bank reserve accounts and wouldn't spill over into Bitcoin or Nasdaq. Those who chased the price above $94,000 were essentially paying the price for their blind spots in understanding monetary policy tools.
The "backstab" of GDP data: Prosperity is the enemy of Bitcoin.
If the "pseudo-QE" only triggered a decline in sentiment, then the revision of GDP data in the Summary of Economic Projections (SEP) fundamentally shook the logical foundation of Bitcoin's "interest rate cut bull market".
In this updated forecast, the Federal Reserve significantly raised its 2026 U.S. GDP growth forecast to 2.3% from 1.8% in September. At the same time, the 2027 unemployment rate forecast was lowered to 4.2% from 4.3%.
This data sends an extremely hawkish signal to the market: the US economy is not only not in recession, but has shown remarkable resilience at this interest rate level. This is not just wishful thinking from the Federal Reserve sitting in its office, but a delayed confirmation of real-world data.
If we take a look at the real-time data, the situation is even "hotter".
Atlanta Fed GDPNow
The model shows that the estimated real GDP growth rate in Q3 2025 once surged to around 4%, far exceeding the consensus expectation of 2.5% for blue-chip stocks. This indicates that the US economy is in an extremely strong expansion phase, rather than on the verge of recession.
For traditional financial markets, this is good news—a "soft landing" or even a "no landing"—but for Bitcoin, it's the most awkward scenario.
First, robust economic growth means the Federal Reserve has no urgent need to cut interest rates. Powell's emphasis at the press conference that "the economy is strong but needs rebalancing" is essentially an implication that future rate cuts will be prolonged and spread out. The market had initially expected the Fed to implement massive quantitative easing (recession-style rate cuts) because the economy was struggling, but instead, it received a rate cut that was already a favor because the economy was so strong (precautionary rate cuts).
Secondly, upward revisions to GDP forecasts directly increased the pricing of the neutral interest rate (R-star). When the US economy grows at 2.3% or even higher, funds remaining in dollar-denominated assets (such as US stocks and bonds) can generate good risk-free or low-risk returns. This diminishes the appeal of Bitcoin as a "hedge against inflation" and "recession."
A shattered consensus: the biggest internal division in 37 years
The final blow that caused Bitcoin to continue its downward spiral from the $92,000 level came from the market's deep skepticism about the Federal Reserve's control.
This vote saw the most serious division since 2019, and even in 37 years. Of the 12 voting committee members, a staggering 3 voted against the resolution, representing a whopping 25%.
Even more disturbing is the composition of the opposition, which reveals a complete policy divide: On one side is Miran, a governor appointed by Trump, who believes the rate cut is too small and advocates for a direct 50 basis point cut, representing the radical dovish faction; on the other side are Kansas City Fed President Schmid and Chicago Fed President Goolsbee, who believe that rates should not be cut at all and advocate for keeping rates unchanged, representing the die-hard hawks.
This situation of "fighting with itself" is extremely rare in the history of the Federal Reserve. It sends a dangerous signal to the market: Powell has lost absolute control of the committee, and the Fed is completely unable to reach a consensus on the two core issues of "whether inflation is under control" and "whether employment has deteriorated."
The dot plot further confirms this division. While the median indicates another rate cut next year, as many as seven officials (including non-voting members) actually oppose this rate cut or favor higher-than-expected rates next year. This means that every future FOMC meeting will become a highly unpredictable political game.
What capital abhors most isn't bad news, but uncertainty. A divided Federal Reserve means that the predictability of monetary policy has plummeted. For the crypto market, which relies on liquidity expectations, this is undoubtedly a major blow. Institutional funds chose to take profits around $91,000 precisely to avoid the risks brought about by this policy chaos.
The noose around real interest rates remains tight.
Looking beyond last night's candlestick chart, when we examine the longer-term macroeconomic environment, we find that the pressure on Bitcoin has not eased with the interest rate cut.
Although nominal interest rates were lowered by 25 basis points, the pace of decline in inflation data remained slow (core PCE expectations were only slightly adjusted to 2.4%). This means that the inflation-adjusted "real interest rate" remains at a restrictive level.
At the press conference, Powell acknowledged that inflation risks remain tilted to the upside and that job growth may be overestimated. However, he did not provide clear guidance on further interest rate cuts, instead repeatedly emphasizing that there was "no predetermined path." This vague statement, coupled with the $40 billion "pseudo-QE" and strong GDP expectations, created an extremely awkward "middle ground."
In this region, the economy is so good that there is no need for monetary easing, and inflation is so high that monetary easing is not feasible.
Conclusion: Awaiting a new narrative amidst deleveraging
This dramatic rise followed by a fall has taught all crypto investors a lesson: at the end of 2025, the macro narrative relying solely on the "Federal Reserve rate cuts" has become ineffective. The market is shifting from "seeking liquidity" to "repricing risk."
As the Nasdaq index encountered resistance and fell back from its historical high, traditional financial markets have begun trading on the logic of "hawkish interest rate cuts." For Bitcoin, having lost its "recession hedge" aura in the short term and failing to receive the support of a "flood of liquidity," a pullback to clear leverage may be an inevitable fate.
Over the next 24 hours, please closely monitor ETF fund flows. If institutional funds accept the revised macroeconomic logic described above, then the selling pressure we saw last night may only be the beginning.
