Hedge funds are adopting a reduced-risk stance ahead of the Federal Reserve's December meeting. On-chain data indicates a decline in Bitcoin (BTC) balances on exchanges and a simultaneous rise in Tether (USDT) and USDC reserves. This trend is interpreted as a signal that institutional capital is unwinding positions and building stable liquidity in anticipation of the Federal Reserve's upcoming decision.
The observed increase in stablecoin reserves aligns with a historical pattern characterized by rate-cut expectations, a pre-event rally, and a subsequent post-announcement pullback driven by deleveraging. Between August and October 2025, funding rates experienced a significant spike as short-term traders heavily invested in long positions. This trend then collapsed following the FOMC announcement, coinciding with BTC reaching a local peak and beginning to retreat.
A similar market structure is currently emerging. CME futures open interest has plateaued, whale spot holdings remain flat, and stablecoin inflows are accelerating. This suggests that professional capital is not attempting to predict the outcome of the Fed's decision but is instead preparing for any potential scenario. Volatility typically expands during FOMC weeks, making it crucial to have a defined risk plan in place before the announcement is made.