In the middle of the night, a bombshell was dropped by the US employment data—ADP private sector employment posted its largest decline since March 2023, far exceeding market expectations. This figure not only caused extreme volatility in the gold market, but also drew everyone’s attention to the Federal Reserve’s December FOMC meeting. The signals of a liquidity inflection point seem to have reached their peak.

The cliff-like plunge in employment data has completely shattered the consensus on a robust labor market. Even more concerning, the release of key US economic data has been repeatedly delayed, with even the CPI report directly canceled. The fragility of the statistical system has been laid bare, and the Fed’s policy decisions are shrouded in uncertainty. The lack of critical data has sent uncertainty for the December FOMC meeting soaring. The cooling signal from ADP has heightened anxiety and division in capital markets, pushing rate cut suspense to its peak.

Meanwhile, geopolitical and policy risks are resonating. Rumors of changes in Fed leadership have raised concerns, with fears that policy independence could be compromised by political interference—an underlying worry for the market. The balance between expectations for aggressive rate cuts and credibility battles is swinging wildly. On top of that, military posturing in the Western Hemisphere and the protracted conflict in Ukraine have driven up global risk premia due to heightened geopolitical tensions. Volatility in energy and commodity prices has increased, and the threat of stagflation continues to spread.

Changes in liquidity dynamics have directly impacted the crypto market. Previously, US stocks were buoyed by expectations of rate cuts and AI sentiment, but employment data has exposed fundamental weaknesses in the economy. The stark contrast between valuation bubbles and economic sluggishness has become clear, and expectations for loose liquidity have cooled significantly. Crypto assets are highly sensitive to liquidity, and any shift in Fed policy will trigger intense volatility. The current long-short struggle is escalating, and leverage risks continue to rise.

December has become a critical decision window for global capital. Economic momentum is weakening, risks are interwoven, and the Fed’s decisions will directly set the tone for liquidity. The crypto market needs to closely monitor policy signals, control leverage, and maintain position flexibility in order to weather this round of volatility.