With the interest rate meeting approaching this week, how will Bitcoin react?

At dawn on December 11th, Beijing time, the Federal Reserve will announce its December interest rate decision, followed by a press conference by Fed Chairman Powell. As of last Friday, the CME FedWatch tool showed an 86.2% probability of a 25 basis point rate cut this week. After a nearly 20% plunge in November, Bitcoin is hoping for a policy signal to reverse its downward trend. Although there was a slight inflow of $220 million into US spot Bitcoin ETFs in the last few days of November, it was insufficient to offset the net outflow of $4.3 billion for the entire month. BlackRock's IBIT fund alone lost $1.6 billion from late October to mid-November. At this time, the macroeconomic environment is fragile, liquidity is insufficient, and positions are tight. The market is extremely sensitive to any slight adjustment in Fed policy. The market's core concerns are focused on three points: First, will the December rate cut materialize? The Fed has already cut rates twice in September and October, but Powell has stated that the December action is "far from certain," exacerbating internal divisions within the FOMC and potentially increasing opposition. Secondly, how to balance inflation and growth? Inflation remains above the 2% target, the ISM manufacturing index has fallen for several consecutive days, and key economic data is delayed due to the government shutdown, creating an information vacuum for policy decisions. Thirdly, will the easing policy continue into 2026? The Federal Reserve stopped shrinking its balance sheet on December 1st, and investors are eager to know if a rate cut in December would mark the end of the cycle. For the crypto market, policy signals are transmitted to Bitcoin through the "real yield - ETF fund flows." NYDIG research confirms that real yields are the core influencing factor; a decline in yields leads to price increases, and vice versa. The October case has already demonstrated this: after Powell refused to commit to further rate cuts, IBIT saw an outflow of $1.6 billion over three weeks, and Bitcoin subsequently fell. Powell's remarks will lead to three possible paths: If he releases a dovish signal (confirming a December rate cut, downplaying inflation risks, and hinting at easing in 2026), the two-year Treasury yield will decline, ETF redemptions may turn into net inflows, and Bitcoin is expected to continue its rebound; If he takes a neutral stance (acknowledging the possibility of a rate cut but emphasizing data dependence), real yields will fluctuate, ETF funds will see mixed performance, and Bitcoin will revert to its current level; If he releases a hawkish signal (downplaying the necessity of a rate cut and warning of inflation risks), the scenario of October may repeat itself, with rising yields triggering a wave of ETF redemptions, and Bitcoin may test recent lows. Currently, internal divisions within the Federal Reserve and speculation about Powell's successor in 2026 have suppressed risk appetite through policy uncertainty. For traders, the core value of his speech lies in answering whether Bitcoin's November plunge was a short-term capitulation or the beginning of a change in macroeconomic logic. If Powell accepts market expectations of interest rate cuts, the anticipated easing of liquidity will support a year-end rebound in risk assets; if his stance reverses, the overall crypto market may need to find new macroeconomic support.