Tonight, the Federal Reserve’s important interest rate decision will be released, landing at 2:00 a.m. Beijing time.

Below are several scenario simulations based on different circumstances, so that the news can be released on time and risks can be prevented.

## Three macro scenarios and their impact on the crypto market

Crypto assets (such as Bitcoin and Ethereum) are essentially highly volatile risk assets, and they are extremely sensitive to global liquidity expectations. The following scenarios are based on different possible outcomes of the decision:

### Scenario 1: Release a “dovish” signal (expectation of large-scale easing) — Extremely bullish

If the Federal Reserve keeps interest rates unchanged, but in its statement emphasizes confidence that inflation is falling, suggesting there is still room for rate cuts within the year, or if the newly appointed chair, Worsh, shows a relatively moderate stance.

**Transmission logic:** Rising expectations for rate cuts will weaken the U.S. dollar and cause U.S. Treasury yields to fall. Funds will move from low-yield cash or bonds into high-risk, high-volatility assets in search of higher returns.

**Market performance:** Global risk appetite will be ignited instantly. Bitcoin and Ethereum will typically act as the “vanguard,” seeing explosive rallies; the overflow effect of capital will also push mainstream altcoins into a new round of frenzy. This is the outcome that the bulls most want to see.

### Scenario 2: Release a “hawkish” signal (a higher-for-longer expectation) — Major bearish impact

If the Federal Reserve raises its inflation expectations, the dot plot shows a drastic reduction in the number of rate cuts in the future—possibly even suggesting that there could be further rate hikes—and it uses tough wording (emphasizing “Higher for Longer”).

**Transmission logic:** The longer-than-expected period of a high-interest-rate environment will greatly increase the opportunity cost of holding crypto assets that do not generate cash flows. At the same time, a strong dollar will siphon global capital, leading to the selling off of risk assets in exchange for dollar cash.

**Market performance:** Market confidence will be severely damaged. Mainstream coins such as Bitcoin may face heavy selling pressure, and prices will be at risk of deep pullbacks. Panic sentiment will spread, altcoins could be in for widespread bloodshed, and the derivatives market may face large-scale forced liquidations (liquidation cascades).

### Scenario 3: Maintain a “neutral/unclear” signal (no change, a wait-and-see stance) — Choppy range trading and shakeouts

If the Federal Reserve only keeps interest rates unchanged, and is very cautious in its wording about economic data and inflation—without providing clear guidance for the future—and Worsh’s comments are also relatively neutral.

**Transmission logic:** Since the market lacks clear guidance on liquidity direction, funds will choose to wait and see, waiting for the release of the next key data.

**Market performance:** In the short term, the market may show wide-range, sideways-to-up-and-down volatility. The forces of both bulls and bears will remain locked in a standoff, and price action may look like an up-and-down “shakeout” trading pattern. This outcome often torments retail traders the most, making it easy to get trapped in the cycle of chasing rallies and selling at the lows.

## III. Suggested trading response strategies

Given how significant this kind of macro event is—and how high the uncertainty is—it is recommended to adopt the following strategies:

**Reduce leverage and protect principal:** Around major decisions, the volatility of the crypto market often amplifies by 20%-50% or even more. At this time, absolutely do not use excessively high leverage on contracts, so as to avoid being directly wiped out by the market’s extreme swings.

**Focus on “buy the expectation, sell the fact”:** In many cases, the market has already priced in expectations before the decision. If the decision outcome matches expectations, sometimes there may even be a brief pullback of the “good news is already priced in” type; if it exceeds expectations, it can trigger a violent one-sided move.

**Keep a close watch on key time points:**

02:00: Watch for the outcome of the interest rate decision (most likely unchanged).
02:30: Watch the press conference. Every word from Worsh could trigger a reversal in market sentiment, especially remarks related to inflation and balance sheet reduction.

**Go with the flow—do not trade against it:** The first few hours after the decision lands are often when emotions are most intense. Don’t blindly guess the bottom or the top—wait until the market direction becomes clear before making decisions.