Federal Reserve spokesperson: Severe internal disagreements over December rate cut cast a shadow on Bitcoin prices

“Federal Reserve mouthpiece” Nick Timiraos stated that disagreements within the Federal Reserve cast a shadow over the possibility of rate cuts in December. During Chair Jerome Powell’s nearly 8-year tenure, such a level of disagreement has rarely been seen. For Bitcoin, rate cuts are usually bullish, but policy uncertainty could trigger short-term volatility. Bitcoin is currently facing a critical test at the $100,000 mark.

Revealing the Three Major Disagreements Within the Federal Reserve

(Source: WSJ)

There are disagreements among Federal Reserve officials regarding whether to cut rates in December. Previously, hawkish members concerned about inflation had advocated for a pause after last month’s rate cut. The officials are divided on three issues, which ultimately depend on judgments: Are the cost increases caused by tariffs truly one-time? Does weak hiring reflect low demand or reduced supply? Are interest rates still too high? The answers to these questions could lead to vastly different views on whether persistent inflation and a soft labor market pose greater threats, and how to adjust risk tolerance accordingly.

The Three Key Disagreements Within the Federal Reserve

Tariff Inflation Assessment: Hawks believe tariffs will keep pushing prices higher, doves see it as a one-time shock.

Labor Market Interpretation: Hawks see rising unemployment as a temporary supply issue; doves see it as a sign of genuine demand weakness.

Neutral Interest Rate Level: Hawks believe current rates are still moderate; doves think they are too high and call for faster rate cuts.

This depth of disagreement is almost unprecedented during Powell’s nearly eight-year tenure. Usually, while there are hawks and doves within the Fed, they tend to reach consensus on key policy decisions. However, current economic data send mixed signals: inflation remains above the 2% target, and tariffs may be pushing prices higher, yet the labor market is cooling and economic growth is slowing. This contradiction makes both rate cuts and pauses carry significant policy risks.

It remains uncertain whether officials will cut rates again at the December meeting. New data might quell the debate. Some officials believe that the December and January meetings could be interchangeable, making a rate cut at year-end somewhat deliberate. This view suggests that if economic data do not worsen significantly, the Fed might choose to pause in December and wait for more information before deciding in January. Alternatively, a rate cut in December accompanied by forward guidance could set a higher threshold for future cuts, indicating the easing cycle is nearing its end.

For market participants, this policy uncertainty itself is a risk. Investors have already priced in about a 62% chance of a rate cut in December in futures markets. An unexpected pause could trigger sharp market volatility. Conversely, a rate cut paired with hawkish guidance might also disappoint markets.

End of Government Shutdown and Liquidity Boost for Bitcoin

On October 1, 2025, due to Congress failing to pass a funding bill, the U.S. federal government entered a shutdown. After over a month, the Senate officially passed a new continuing resolution, which will fund the government until January 30, ending the shutdown. All votes have been tallied: 60 in favor, 40 against. According to the U.S. Treasury’s general account ending balance, the current balance is $953.55 billion, a stark contrast to the below $750 billion levels seen previously. Once the government reopens, it will likely spend heavily, injecting approximately $200 billion of liquidity into the financial markets.

The ongoing uncertainty about when the U.S. government will reopen has been a key factor holding back Bitcoin prices. Historically, the last government shutdown occurred from late December 2018 to late January 2019, during Trump’s first term. After the shutdown ended on January 25, 2019, Bitcoin surged over 265% in the following five months, from $3,550 to $13,000. This suggests potential for future crypto rallies.

Liquid Capital founder Yi LiHua commented: “As expected, the government reopening + rate cut expectations + crypto policies + universal money printing are starting a new bull market, and it’s also the best time for short squeeze. Don’t short + don’t short. These days, repeatedly talking about bottom-fishing strategies at low levels, looking back, should become the best buying opportunity.” Blue Harbor Interactive founder Wang Feng said: “In my opinion, the bottoming process driven by the U.S. government shutdown and Fed rate hike doubts has ended. The dragon king is more certain to come. Next, this market will be very good.”

Trump’s $2000 Tariff Bonus Sparks Inflation Concerns

On November 9, Trump announced on social media platform Truth Social that everyone (except high earners) would receive at least $2000 in bonuses. Kalshi traders estimate the probability of the Supreme Court approving this policy at only 23%, while Polymarket traders estimate it at 21%. Although the likelihood of implementation is low, such a large-scale fiscal stimulus proposal already influences market expectations.

Kobeissi Letter provided a detailed market analysis on “Trump’s $2000 per person tariff bonus,” estimating that over 85% of American adults would receive this payment, totaling over $400 billion. Meanwhile, U.S. debt has approached $40 trillion, making such large-scale stimulus payments highly impactful economically. Just as stimulus checks in 2021 significantly boosted consumption, one-off stimulus measures often lead to prolonged high inflation periods. After the last round of stimulus, U.S. inflation approached 10%.

This inflation concern is a core reason hawkish Fed officials oppose further rate cuts. If Trump’s $2000 bonus is actually implemented, it would inject massive liquidity into the economy, potentially reigniting inflation pressures. In such a scenario, the Fed might be forced to pause or even reverse rate cuts. For Bitcoin, short-term large-scale fiscal stimulus could provide liquidity support, but if inflation spirals out of control, the Fed may be compelled to raise rates again, putting pressure on all risk assets, including Bitcoin.

Market analyst Anthony Pompliano said: “Stocks and Bitcoin only rise when stimulus measures are announced.” While this view simplifies the relationship, it does reflect the close link between asset prices and monetary policy in recent years.

Rate Cut Disagreements and the $100,000 Bitcoin Defense

On October 30, the Fed’s latest rate decision lowered the federal funds rate target range by 25 basis points to 3.75%-4%, in line with market expectations. This is the fifth rate cut since September 2024, totaling 125 basis points. The key reasons for this cut include slowing economic growth, easing inflation pressures, and preemptive policy positioning.

For Bitcoin, rate cuts are generally bullish. Lower rates reduce the opportunity cost of holding non-yielding assets, making Bitcoin more attractive relative to deposits and bonds. Additionally, rate cuts often weaken the dollar, and as a non-sovereign currency, Bitcoin tends to serve as a safe haven during dollar depreciation. However, internal disagreements within the Fed add uncertainty to this logic. If the December meeting unexpectedly pauses rate cuts, markets might interpret it as a policy shift, triggering risk asset sell-offs.

Bitcoin is currently facing a critical test at the $100,000 level. Technically, $100,000 is an important psychological and support level; losing it could trigger technical selling. On the capital side, Bitcoin ETFs have seen nearly $1 billion outflows in the past week, indicating institutional investors are reducing holdings amid policy uncertainty. However, the government shutdown ending will inject about $200 billion of liquidity, and combined with potential rate cuts and Trump’s stimulus policies, Bitcoin could receive multiple bullish supports.