The Federal Reserve's internal divisions, Trump's pressure to cut rates—will the crypto market in 2026 face opportunities or risks?

Recent movements in the financial markets have been significant. The Federal Reserve has cut interest rates three times in 2025, bringing the rate down to the 3.5%-3.75% range. But there's a detail worth noting—the vote was 9 in favor, 3 against, marking the largest internal disagreement in six years. The meeting minutes even hint at something: service sector inflation is more sticky than expected, far from the 2% target. Even more surprisingly, the plan for rate cuts in 2026 has been reduced to just one.

Historically, each rate cut has caused market turbulence. During previous easing cycles, Bitcoin surged initially but then fell by 1.23%, directly causing 130,000 traders to be liquidated. Now, with such disagreement within the Fed, subsequent market volatility is likely to be even more intense.

On the other side, Trump's stance is more aggressive. He publicly stated he wants to cut rates to 1%, and doesn't rule out personnel changes for the Fed Chair. Market analysts believe the new chair is likely to be a dovish candidate—Wosh has a 47% chance of nomination, with Hasset close behind. Both are known for supporting rate cuts.

What does a 1% interest rate mean? Dropping directly from 3.75% to 1% would unleash massive liquidity. In such an environment, breaking through the 120,000 mark for Bitcoin is not impossible. But risks also exist. If political interference undermines the Fed's independence, the dollar's credibility could be shaken, and crypto assets might face a full-scale bloodbath. There have been past instances of 30% monthly declines and 180,000 traders liquidated, and the probability of such repeats is not zero.

Key upcoming dates to watch: the December 30 meeting minutes revealing the Fed's true stance; the first week of January when the new chair officially takes office; and the progress of Trump's rate cut promises throughout 2026.

The current situation is like betting on a game of big or small—rate cuts don't necessarily mean a bull market, and loose liquidity isn't guaranteed to be a safe haven for risk assets. Prices built on narratives and hype could collapse at any moment.

What do you think? Can the 1% target truly be achieved? Will Bitcoin challenge 120,000 or retest 80,000? Who will be the final choice for the new Fed Chair? Share your thoughts in the comments.