The Federal Reserve's 96% probability of holding steady in January: Liquidity games and strategic opportunities in the crypto market

BlockBeats January 9th News — After the latest employment data from the U.S. Bureau of Labor Statistics was released, Polymarket's prediction market experienced a dramatic turn — the probability of the Federal Reserve maintaining interest rates at the January FOMC meeting surged to 96%, with only a 5% chance of rate cuts. This data starkly contrasts with the market's previous expectation of a "dovish shift," yet it triggered a remarkably consistent betting consensus among traders: despite a firm stance to hold in January, the expectation of a total of 50 basis points of rate cuts throughout the year remains solid.
Deep Logic Behind the Policy Deadlock: The Tug-of-War Between Employment Data and Inflation
The current 88.4% probability of maintaining rates reflects the true picture of the U.S. economy's "quasi-stagflation" pattern. In August 2025, non-farm employment increased by only 22,000 jobs, with the unemployment rate rising to 4.3%, yet core PCE inflation stubbornly remains at a relatively high 2.6%. The December FOMC minutes showed unanimous support for holding rates steady, but this consensus has now cracked — among 18 officials, 9 support two more rate cuts this year, 6 believe no more than one, and Governor Milani even advocates for an aggressive 50 basis point cut, sharply contrasting with Powell's "data-driven" approach.
This policy uncertainty is precisely the macro backdrop for the crypto market. The dollar index oscillates between 103-105, gold prices break through $2900 per ounce, and Bitcoin repeatedly tests the $90,000 level. The indecision in traditional markets, instead, provides a unique liquidity window for digital assets.
Liquidity Buffer Exhausted: From "Pump" to "Refill" Reversal
Delphi Digital's latest analysis reveals a key turning point: the Federal Reserve's reverse repurchase agreement (RRP) balance has fallen from a peak of $2 trillion to nearly zero, indicating that its liquidity buffer has officially been depleted. In 2023, RRP could still buffer the Treasury's General Account (TGA) replenishment by absorbing government bond issuance, avoiding draining bank reserves; now, this buffer no longer exists, and any bond issuance or TGA rebuilding must directly consume bank reserves.
This forces the Fed to face a binary choice: either allow reserves to decline and risk a surge in repo rates (repeating the 2019 liquidity crunch), or directly expand its balance sheet to inject liquidity. Historical experience suggests the second option is highly likely. Coupled with the end of quantitative tightening (QT) and the upcoming reduction of TGA, marginal liquidity has turned positive for the first time since early 2022.
This is the biggest macro positive for crypto markets. As the Fed shifts from "withdrawing liquidity" to "reinjecting liquidity," the key resistance over the past two years is fading. As shown by the $13.5 billion overnight repo operation in early December (second only to the pandemic period of 2020), the central bank has sent a clear signal: liquidity gates will not fully close.
Institutional Position Reconfiguration: From Speculation to Allocation Paradigm Shift
Alongside macro improvements, a fundamental change is occurring in institutional holdings:
Spot ETF inflows continue: over the past five weeks, net inflows reached $6.63 billion, with BlackRock's crypto portfolio soaring from $54.77 billion at the start of the year to $102.09 billion. This "costless" buying differs fundamentally from speculative trading in 2024.
Corporate Accumulation Wave: Bitmine Immersion added 33,000 ETH in one week, reaching a total of 4.14 million ETH (3.4% of total supply); MicroStrategy (now Strategy) raised $62 million through stock sales and increased holdings by 1,287 BTC. These actions are no longer short-term speculation but strategic asset allocation on the balance sheet.
Record-breaking Derivatives Market: CME Group's crypto derivatives daily trading volume hit a historic high of $12 billion in 2025, indicating institutional participation far exceeds retail. When Wall Street constructs complex strategies with futures and options, market volatility is systematically suppressed, but trend resilience is significantly enhanced.
Bitcoin's "Fragile" Rise: Illusion of Liquidity or True Bottom?
Data from CoinDesk shows that although Bitcoin retested the $90,000 level, spot trading volume has fallen to its lowest since 2023. This divergence of "rising price, shrinking volume" is often seen as a warning in technical analysis, but in the current macro context, it may carry deeper meaning.
On-chain data from Glassnode reveals: Bitcoin exchange balances continue to decline, while long-term holders (LTH) account for over 75% of holdings. This indicates that circulating supply is being firmly locked away, with very little floating supply remaining. The rise on low volume is not due to lack of buyers but reflects a depletion of sellable chips.
Meanwhile, the stablecoin market cap has increased by $12 billion since November, with USDT/USDC holdings on exchanges reaching historic highs. These "dry gunpowder" reserves could ignite the next rally at any time. The more indecisive the Fed's policy, the more traditional finance (TradFi) funds need to seek yield anchors through crypto assets.
Strategic Allocation Window: Gold Anchor + Crypto Attack "Barbell Strategy"
Based on the current macro landscape, investors may consider the following allocation framework:
30-40% in gold as a risk control anchor: In an environment of uncertain Fed policy and sticky inflation, gold breaking through $2900 confirms its safe-haven value. Gold is not only an inflation hedge but also a long-term bet on the weakening of dollar credibility.
40-50% in core positions of BTC/ETH: The liquidity turning point is evident, institutional holdings are locked, and technical indicators show shrinking volume upward movement — these signals suggest Bitcoin is in the late "bottoming" phase. Ethereum benefits from the maturity of Layer2 ecosystems (PeerDAS mainnet launch, zkEVM in final stages), and is expected to break out independently.
10-20% in high-beta assets: High-performance public chains like Solana, Sui, and narratives such as AI+DeFi, RWA are suitable for investors with higher risk tolerance.
Conclusion: Finding Certainty in Uncertainty
A 96% probability of holding steady in January, with a full-year expectation of 50 basis points of rate cuts — this "short-term rigidity, long-term easing" policy combination essentially grants the crypto market a valuable period for accumulation amid volatility. When the Fed's "three-piece interest rate toolkit" (including the standing repo facility) has no upper limit, RRP is exhausted, liquidity is forced to re-enter, and institutional holdings shift from speculation to allocation, all macro signals point to the same conclusion: the crypto market is undergoing a paradigm shift from "narrative-driven" to "value-driven."
This is not the ICO frenzy of 2017, nor the DeFi summer of 2021. It is a confluence of liquidity re-pricing, restructuring of chip ownership, and institutional paradigm recognition. For investors, the worst strategy may be chasing highs and selling lows; the wisest decision might be to set your allocation ratios, then turn off the charts and let time be your ally.
【Interactive Topic】
What do you think about the Fed's 1月 hold steady but still possibly cut 50 basis points throughout the year? Will this change your crypto asset allocation strategy? Feel free to share your views in the comments:
1. Bullish: Liquidity turning point has arrived, now is the best time to build positions
2. Cautious: Waiting for clearer rate cut signals and increased trading volume
3. Watchful: Macro economy is too complex, better to miss out than make mistakes
Don’t forget to like, share with friends who are also following macro policies and crypto market linkages! Keep tracking BlockBeats for the latest in-depth analysis and data insights. Every comment and share from you is the greatest support for our original content!
Risk warning: The content of this article is for reference only and does not constitute investment advice. Cryptocurrency prices are highly volatile; please make decisions cautiously according to your risk tolerance.