The Impact of the December 2025 FOMC Decision on Bitcoin and Global Risk Assets

The December 2025 Federal Open Market Committee (FOMC) meeting is shaping up to be a pivotal moment for global markets. With a 25-basis-point rate cut expected to bring the federal funds rate to 3.50%-3.75% and the formal end of quantitative tightening (QT), the Fed's actions will reverberate across risk assets, particularly Bitcoin. Here's why liquidity shifts and institutional positioning are setting the stage for a potential breakout in digital assets-and what investors should watch for.

The Fed's Policy Crossroads: Rate Cuts and the End of QT

The Federal Reserve faces a delicate balancing act. While the CME FedWatch tool pegs an 87% probability of a December rate cut, internal divisions persist. Some officials argue that easing monetary policy is critical to support a cooling labor market and mitigate employment risks, while others caution against premature action given inflation remains above 2%. Compounding the uncertainty, the recent government shutdown delayed key economic data, leaving policymakers with an incomplete picture.

Beyond the rate cut, the December meeting will mark the end of QT-a program that reduced the Fed's balance sheet by $2.4 trillion since 2022. The October 2025 FOMC statement confirmed this shift, with the central bank pivoting toward reserve management purchases (RMP) as early as January 2026. These purchases could inject up to $400 billion annually into the financial system, signaling a structural shift from liquidity drainage to rebuilding.

Bitcoin's historical correlation with global liquidity metrics, particularly M2 money supply, suggests it could benefit from the Fed's pivot. The U.S. M2 supply has already surpassed $22.3 trillion, creating a fertile environment for risk assets. With QT ending and RMP on the horizon, Bitcoin's price action may mirror gold's recent trajectory, as both assets trade at a 0.68 correlation-the highest in two years according to analysis.

Institutional investors are already positioning for this shift. MicroStrategy's $962.7 million Bitcoin purchase at $90,615 per coin and on-chain accumulation of 45,000 BTC in a week highlight growing confidence. Meanwhile, 68% of institutional investors plan to allocate to Bitcoin exchange-traded products (ETPs), with 60% preferring registered vehicles. This trend underscores Bitcoin's maturation as a legitimate portfolio diversifier, especially as regulatory clarity improves.

Global macroeconomic signals add complexity. Japan's bond market turmoil and potential yen rebound may redirect capital flows, while U.S. data on employment and PCE inflation will refine expectations for further easing. Investors must also monitor the ADP employment report and initial jobless claims ahead of the December 10 rate decision according to market forecasts.

The Fed's December decision will not only impact Bitcoin but also shape broader risk asset dynamics. A 25-basis-point rate cut could boost liquidity conditions, supporting equities and other non-yielding assets. However, the outcome hinges on Fed Chair Jerome Powell's messaging. If he emphasizes labor market stability and confirms a liquidity expansion path, Bitcoin could break above $93,500 and target $100,000. Conversely, a hawkish pivot or delayed clarity on RMP could trigger consolidation or a retest of support near $75,000 according to market analysis.

The Bottom Line: Positioning for a Liquidity-Driven Rally

Bitcoin is at a critical juncture, with the Fed's December decision acting as a catalyst. The end of QT and potential RMP program could reverse years of liquidity contraction, creating tailwinds for risk assets. Institutional demand, driven by strategic allocations and regulatory progress, further reinforces this narrative.

However, volatility remains a wildcard. If the Fed delays liquidity expansion or adopts a cautious stance, Bitcoin could face near-term headwinds. The key for investors is to balance optimism with pragmatism-leveraging the current environment to accumulate while hedging against short-term volatility.

As the December 2025 FOMC meeting approaches, one thing is clear: liquidity shifts are reshaping the financial landscape, and Bitcoin is no longer a fringe asset but a barometer of global monetary policy.