Author: Clow
The Federal Reserve has cut interest rates, but the market is in panic.
On December 10, 2025, the Federal Reserve announced a 25 basis point rate cut and plans to purchase $40 billion in Treasury bills within 30 days. Traditionally, this is seen as a significant positive move, but the market's reaction was unexpected: short-term interest rates fell, while long-term Treasury yields rose instead of falling.
Behind this abnormal phenomenon lies a more dangerous signal: investors are pricing in the structural risk of "loss of Federal Reserve independence." For crypto investors, this is a critical moment to reassess asset allocation.
Rate Cuts Are Not Simple
On the surface, a 25 basis point rate cut seems like a routine response to economic slowdown. From the perspective of economics textbooks, rate cuts are typically viewed as standard tools to stimulate the economy, lower corporate financing costs, and boost market confidence.
However, the timing is too "coincidental."
Before the announcement, Kevin Hassett, Trump's economic advisor and a popular candidate for Federal Reserve Chair, publicly "predicted" a 25 basis point cut. This "precise prediction" from the core circle of the White House forced the market to question: is this truly an independent decision by the Federal Reserve based on economic data, or is it the result of prior "coordination"?
More critically, Trump has publicly attacked Powell multiple times over the past year, accusing him of "playing politics" and even suggesting seeking his removal. This unprecedented political pressure has crossed the line since the Federal Reserve's establishment. Historically, even during the most severe economic crises, few presidents have intervened so blatantly in central bank decisions.
The market no longer views rate cuts as purely professional decisions but as a product of compromise between policy and political pressure.
This collapse of trust is more frightening than the rate cut itself.
$40 Billion in Debt Purchases, Implicit Money Printing?
In addition to the rate cut, the more controversial move is the Federal Reserve's announcement to purchase $40 billion in short-term Treasury bills within 30 days.
The official explanation is to maintain liquidity stability, technically different from the quantitative easing of 2008. But the market is not buying it.
Against the backdrop of a continuously expanding U.S. fiscal deficit, investors tend to view any asset purchase as a prelude to implicit quantitative easing or fiscal dominance.
Investors choose to believe the worst-case scenario—political intervention has led to implicit easing, and long-term uncertainty is increasing.
The Real Risk
The independence of the Federal Reserve is the cornerstone of financial stability and the global status of the dollar. According to the Daily Economic News, financial experts have clearly pointed out that the loss of Federal Reserve independence is the first domino that could topple "dollar hegemony," equivalent to a nuclear bomb aimed at dollar credit.
How is the market pricing this risk?
Standard Chartered's latest research shows that while the money market expects short-term interest rates to decline, concerns about the Federal Reserve's independence and fiscal policy are pushing up long-term U.S. rates. This is the market's early pricing of the "fiscal dominance" risk.
The rise in long-term rates is not a response to short-term liquidity scarcity but rather a demand from investors for a higher term premium to hedge against potential future fiscal discipline collapse. The logic is: political intervention escalates → the market expects the Federal Reserve to be forced to accommodate fiscal expansion → term premiums rise to hedge against inflation risks → long-term Treasury yields are pushed higher.
Once credibility is lost, regaining market trust is extremely difficult. More alarmingly, despite the long-term damage to dollar credit fundamentals, it is still supported by external geopolitical uncertainties in the short term.
This short-term safe-haven support obscures the long-term, structural weaknesses that the loss of Federal Reserve independence poses to the dollar.
Impact on the Crypto Market
Based on the "easing + risk premium" composite macro environment, traditional assets face a complex situation: the bond market shows a divergence between short and long-term, stock market volatility is rising, gold, while supported by dual factors, still has opportunity costs, and the dollar faces contradictions between short-term safe-haven and long-term depreciation.
For crypto participants, this crisis of Federal Reserve independence is precisely a key moment to reassess the value of crypto asset allocation.
Bitcoin: "Digital Gold" Amidst Eroding Dollar Credit
When the independence of the Federal Reserve is questioned and the foundation of dollar credit is shaken, Bitcoin's core value proposition is unprecedentedly strengthened.
Scarcity against monetary overexpansion: Bitcoin's total supply is capped at 21 million coins, a fact written into the code that cannot be changed by anyone. In stark contrast, the Federal Reserve may yield to political pressure and expand the money supply without limits.
Historical data clearly supports this. Whenever the Federal Reserve engages in large-scale balance sheet expansion, Bitcoin often experiences strong surges. During the quantitative easing in 2020 amid the pandemic, Bitcoin skyrocketed from $3,800 to $69,000, an increase of over 17 times. This is not a coincidence; the market is voting with real money for "hard currency."
Although this time it is only purchasing $40 billion in Treasury bills, a scale far smaller than the "flooding" in 2020, concerns about "fiscal dominance" have already begun to ferment. Once the Federal Reserve is politically hijacked, the future may not be $40 billion, but $400 billion or $4 trillion. This expectation is re-pricing Bitcoin's anti-inflation value.
Decentralization against political intervention: The essence of the loss of Federal Reserve independence is the politicization of monetary policy. Bitcoin's decentralized nature makes it inherently immune to the intervention of any single government or institution.
No one can force the Bitcoin network to "cut rates" or "purchase debt," and no president can threaten to remove Bitcoin's "chairman." This resistance to censorship demonstrates unique value in the face of the trust crisis in the traditional financial system. When people no longer believe that central banks can withstand political pressure, decentralized monetary systems become the last refuge.
Ethereum and DeFi: Alternative Financial Infrastructure
When the trust foundation of the traditional financial system is challenged, decentralized finance (DeFi) offers an alternative that does not rely on a single sovereign credit.
The loss of Federal Reserve independence is essentially a collapse of "trust"—the market no longer believes that central banks can make professional decisions independent of political pressure. In this context, a financial system that does not require trust becomes an advantage.
DeFi protocols on Ethereum automate execution through smart contracts. Borrowing rates are determined by algorithms and market supply and demand, rather than a "politically pressured" committee. You deposit funds, and the contract executes automatically; you lend funds, and the interest rates are transparent and verifiable. The entire process does not require trust in banks or central banks, only trust in code.
This "code is law" characteristic shows unique appeal during a financial trust crisis. When you worry that banks might freeze your assets for political reasons, or that central banks might overissue currency due to fiscal pressure, DeFi provides an exit option.
It is important to note that mainstream stablecoins (USDT, USDC) are still pegged to the dollar and will be affected by dollar credit risk transmission. If the dollar depreciates in the long term, the purchasing power of these stablecoins will also decline.
However, this also creates new opportunities: decentralized stablecoins (DAI) or stablecoins pegged to a basket of assets are exploring paths to detach from single sovereign credit. Although these projects are still in their early stages, they may encounter new development opportunities against the backdrop of questioning dollar credit.
Risks and Opportunities Coexist in the Crypto Market
It is essential to emphasize that the crypto market itself is highly volatile and not suitable for all investors. A 10% daily fluctuation in Bitcoin is enough to trigger panic in traditional financial markets, but in the crypto world, it is commonplace.
In the current environment where the independence of the Federal Reserve is challenged and traditional safe-haven assets face contradictions, crypto assets, as a "non-correlated asset," have their allocation value worth reassessing. In the past, Bitcoin was often viewed as a "risk asset," moving in tandem with tech stocks. However, as the trust foundation of the traditional financial system begins to shake, this correlation may fundamentally change.
More importantly, this crisis of Federal Reserve independence may become a watershed moment. In the past, Bitcoin was seen as "a toy for speculators"; in the future, it may become "a tool for hedging sovereign credit risk." This narrative shift will redefine the position of crypto assets in the global financial system.
Conclusion
This Federal Reserve decision is not a simple rate cut but a product of compromise between the professionalism of monetary policy and political demands.
The real test will come during economic overheating. If inflation rises in the future and the Federal Reserve is forced to delay rate hikes due to political pressure, independence will be completely lost. At that point, not only the dollar but the entire dollar hegemony system will face reconstruction.
For crypto investors, do not be misled by the short-term benefits of rate cuts. When the trust foundation of the traditional financial system is challenged, the role of crypto assets is undergoing a fundamental transformation—from "speculative tools" to "structural choices for hedging sovereign credit risk."
History often turns unexpectedly. When people begin to question the independence of central banks and the foundation of dollar credit starts to shake, decentralized monetary systems will no longer be a "utopia" but an increasingly realistic option.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
