The Federal Reserve holds steady, the curtain is about to fall on Bitcoin options, and volatility in the crypto market is now inevitable.

Federal Reserve Decision Maintains Status Quo, 2026 Rate Cut Expectations Shrink

The U.S. Federal Open Market Committee (FOMC) announced in the early hours of December 19th that the federal funds rate target range will remain unchanged at 4.25%-4.50%, in line with market expectations. However, the dot plot data brought a subtle change—the expected number of rate cuts in 2026 was revised down from 3 to 2, indicating a more cautious stance by the Federal Reserve towards easing policies.

Powell emphasized at the subsequent press conference that current inflation levels are still above target and that more data is needed to support further easing measures. This suggests that even if CPI data shows signs of moderation, a shift in monetary policy will still take time. The US November unadjusted CPI year-over-year fell to 2.7% (expected 3.1%), with core CPI at 2.6% (expected 3%), but these figures are still insufficient to prompt Powell to pursue aggressive rate cuts.

Regulatory Breakthrough: Crypto Compliance Framework Continues to Improve

The SEC recently issued a statement titled “Regarding the Custody of Digital Asset Securities by Broker-Dealers,” clarifying the applicability of Rule 15c3-3(b)(1) in the context of digital asset securities. This move provides a clearer compliance pathway for institutional-grade crypto asset custody and is expected to attract more traditional financial institutions into the crypto space.

Meanwhile, the Trump administration has accelerated regulatory appointments. The U.S. Senate confirmed Mike Selig as head of the Commodity Futures Trading Commission (CFTC), and Travis Hill will lead the Federal Deposit Insurance Corporation (FDIC). These new appointments suggest a potential shift in regulatory attitudes toward cryptocurrencies.

Regarding legislative progress, White House AI and cryptocurrency affairs chief David Sacks revealed that the crypto market structure bill, the “CLARITY Act,” has moved closer to formal legislation. It is expected to undergo Senate review and amendments in January, indicating that a significant crypto law could be enacted this year.

Options Expiration Approaching, Volatility May Rise Again

According to Bloomberg, approximately $23 billion worth of Bitcoin options contracts will expire next Friday. This large options volume is likely to trigger market volatility, as options expiration often involves adjustments to hedging positions and reallocation of liquidity.

Currently, Bitcoin is oscillating around $89.61K, down 3.62% in the past 24 hours, with a trading volume of about $11.4 billion. Ethereum’s performance is weaker, with a 24-hour decline of 6.77% and a trading volume of $6.96 billion. Market liquidation data shows that in the past 24 hours, the total liquidation across the crypto market reached $547 million, with longs accounting for $390 million, Bitcoin liquidations at $183 million, and Ethereum at $133 million.

Spot inflows show that Bitcoin saw approximately $87 million in inflows and about $109 million in outflows over the past 24 hours, with a net outflow of $22 million, reflecting ongoing selling pressure.

Institutional Positioning Continues to Deepen, Capital Flows Diverge

Bitcoin spot ETFs saw a total net inflow of $457 million the day before yesterday, led by Fidelity’s FBTC with a net inflow of $391 million. Institutional buying remains strong. However, Ethereum spot ETFs are experiencing net outflows, with five consecutive days of capital outflow, the most recent net outflow of $22.42 million. The Solana spot ETF in the US had a single-day net inflow of $10.99 million, indicating growing market interest in other major cryptocurrencies.

Supported by the Federal Reserve’s rate cut on December 10th, crypto asset treasury companies (such as publicly listed companies holding crypto) have seen a net inflow of $2.6 billion over the past two weeks, reaching a seven-week high. One leading company made two purchases within a week, acquiring over 20,000 BTC with a transaction value close to $2 billion.

However, Cointelegraph’s latest analysis points out that if MSCI proceeds with plans to remove crypto asset treasury companies from its indices, these companies may be forced to sell up to $15 billion worth of cryptocurrencies, which could be a potential bearish signal for the market.

Ecosystem Development Accelerates, New Products Emerge Frequently

Ethereum ecosystem receives positive news: CryptoQuant data shows that Ethereum exchange supply has fallen to its lowest level since 2016, significantly easing short-term selling pressure. Developers also plan to increase Ethereum’s throughput again in January, aiming to raise the gas limit from 60 million to 80 million.

The stablecoin landscape continues to expand. US nationwide bank SoFi has launched its own USD stablecoin, SoFiUSD, which is now live on Ethereum. JPMorgan has deployed its JPM Coin on the Base blockchain, currently limited to transfers among whitelisted users.

In cross-chain collaborations, Near Protocol’s NEAR token has been bridged to the Solana network, further breaking down ecosystem silos. Bitwise has submitted a registration statement for the Bitwise SUI ETF to the SEC, potentially providing investors with more exposure to mainstream cryptocurrencies.

Market observers note that Bloomberg analyst James Seyffart agrees with crypto asset management companies’ forecast of launching over 100 crypto ETFs by 2026, but also warns that many of these products may face survival challenges. A large number of crypto ETPs could be liquidated, possibly by the end of 2026 or early 2027. On the other hand, CF Benchmarks considers Bitcoin a core asset for investment portfolios and predicts its price could reach $1.4 million by 2035, injecting a long-term bullish outlook into the market.