Recently, the story behind this wave of market movements is even more complex than the price trend itself.

By the end of 2025, disagreements within the Federal Reserve decision-making body finally came to light. Directors Waller and Bowman, who are hawkish, have been advocating for accelerated rate cuts, while Chair Powell has remained steadfast, repeatedly emphasizing that inflation control is the top priority at the moment. This internal tug-of-war has directly led to inconsistent policy signals, causing investors to be completely confused about the future pace of rate cuts. Even more outrageous, Trump has publicly pressured on social media, demanding "an immediate 300 basis point cut," and even threatened to remove Powell. These series of actions have thoroughly disrupted market expectations.

This policy chaos quickly impacted the crypto space. Bitcoin plummeted from $92,000 to $80,600 within 24 hours, a decline of over 9.1%, causing $19.2 billion in liquidations across the entire network. Ethereum and other major coins also tumbled, and the market’s fear index soared to recent highs.

Looking closely at this crash, it is essentially the result of three forces colliding: policy uncertainty, high leverage liquidations, and emotional resonance. The debate among Federal Reserve officials over whether to cut rates in December has raised concerns about tightening liquidity, while leveraged longs were forced to close positions after prices broke through key support levels, triggering a chain reaction that created a classic "longs killing longs" vicious cycle.

From the retail investor’s perspective, this crash exposes a deep paradox: the market often prices in good news in advance. When the Fed actually cuts rates, it can instead signal capital outflows. The rate cut in October last year was a typical example; Bitcoin surged to $117,000 at that time, but then quickly reversed. This pattern repeats itself, indicating that relying solely on waiting for policy easing is no longer a viable strategy.

The question now is: what will the Federal Reserve do next? The market doesn’t need rate cuts per se, but a clear policy direction. As long as internal conflicts persist, volatility in the crypto market will continue. For participants, understanding the macro logic behind this is more important than just watching candlestick charts.