Key Insights
- •The FOMC meeting on December 10 carried a 97% probability of a 25 basis point rate cut, making the decision itself a non-event for Bitcoin price action.
- •Federal Reserve Chair Jerome Powell’s guidance on the 2026 policy path emerged as the primary driver of volatility, with major banks diverging sharply on next year’s easing trajectory.
- •A $4 billion wall of short liquidations clustered between $95,000 and $103,000 threatened to amplify any bullish momentum triggered by the Fed’s dovish signals.
Markets had baked in the 25 basis point rate reduction for days, with Fed funds futures pricing a 97% chance of the move well before the announcement. Bitcoin price traded at $91,952.86 ahead of the decision, reflecting widespread anticipation that the Fed would deliver its third consecutive cut since September. As a result, the December decision itself carried minimal surprise value. The actual risk centered on the Federal Reserve’s Summary of Economic Projections and Powell’s press conference framing of 2026.
September’s dot plot had signaled just one additional cut next year, projecting a 3.4% terminal rate by year-end 2025. Analysts expected updated guidance to shift toward neutral or hawkish territory, with the Fed telegraphing an extended pause through early 2026 before resuming cuts. Major banks split on their 2026 forecasts in the 48 hours before the meeting. Barclays projected two additional 25 basis point cuts in March and June. Meanwhile, Deutsche Bank anticipated a hold through the first quarter, then a resumption of easing around September, tying the shift explicitly to the incoming Fed leadership transition. HSBC took the hawkish outlier position, forecasting no cuts for the next two years following December’s move.
Why 2026 Guidance Mattered More Than December’s Decision
The divergence in institutional forecasts highlighted where repricing risk sat. Reuters reported on December 9 that investors had shifted their focus to whether the Fed would signal only a limited 2026 easing runway. Updated projections implying something like two cuts next year, followed by a flatter path after that, represented the kind of hawkish-neutral guidance that could pressure risk assets even with a fully expected near-term decision.
Powell’s term expires in May 2026, adding to the uncertainty around forward guidance. One example is Bank of America explicitly tying its expectation of additional cuts next year to the coming leadership change rather than to macro conditions, representing a distinctly 2026-centric rationale. The incoming chair’s policy preferences remained unknown, making any long-term projections unusually speculative. Communication risk also escalated around the 2026 timeline, as dissents would become more common and unanimous decisions rarer next year, raising the odds that the dot plot and press conference commentary would land as the market-moving event rather than the policy rate itself.
Bitcoin price volatility had historically spiked on Fed guidance shifts rather than on mechanical rate moves telegraphed weeks in advance. Powell is expected to emphasize that further cuts require either weaker inflation data or higher unemployment. Inflation had remained sticky above the Fed’s 2% target, and the labor market showed resilience despite monetary tightening. Without clear deterioration in either metric, the central bank had limited justification for aggressive easing in 2026.
Bitcoin Price Liquidation Map Shows Vulnerability Zone
The Binance BTC/USDT perpetual liquidation map revealed significant short position clusters that could amplify volatility if Bitcoin prices rose. Two realistic short liquidation leverage zones are $95,000 and $97,000. In the $95,000 cluster, an estimated $1 billion in short positions is at risk of forced liquidation. In the $98,000 cluster, another $1 billion in short positions are vulnerable to liquidation, adding to volatility.
Liquidation maps function like stored gasoline rather than predictions of how fast a fire would spread. The dollar amounts shown represented estimated notional value that became vulnerable around those price levels, but actual forced buying that hit order books could be smaller, staggered, and partially offset by fresh shorts opening or spot sellers taking profit. Additionally, the impact depends on the order book depth at the moment of breach.
If the combined effective depth on Binance and spillover venues within a 1% price band sits in the few hundred million-dollar range during a fast move, then a wave of forced buybacks in the high hundreds of millions could plausibly create a quick 2% to 5% overshoot beyond the trigger before liquidity refills. Thinner depth leads to larger overshoots, while thicker depth with aggressive spot sellers could quickly fizzle a squeeze.
How Liquidation Cascades Could Play Out
As of press time, the +2% depth of the BTC/USDT pair on Binance is $16,248,016, while the -2% depth is $16,250,849. A clean push through $95,000 could send Bitcoin’s price into the mid-to-high $96,000 range, or even $97,000, on momentum alone if liquidations cascaded smoothly and funding didn’t instantly attract new shorts. If the price then ground through or snapped past $98,000 with the larger cluster, the squeeze extension could briefly tag the psychological $100,000 level and potentially overshoot beyond that before cooling.
However, real-time conditions would dominate the actual move size. Order book thickness at the breach, whether spot centralized exchanges and ETF flows were net buyers or sellers, how quickly funding flipped, and whether large discretionary sellers defended round numbers. A $1 billion short liquidation pocket has historically added a few extra percentage points of upside overshoot on the fast tape. In comparison, a $2 billion pocket could turn that into a run toward the next major psychological level if spot demand held and new shorts didn’t reload immediately.
Bitcoin price action following the FOMC meeting would reflect the interaction between Powell’s 2026 guidance and the liquidation map structure. Dovish commentary suggesting more cuts next year could trigger the initial move through $95,000, setting off the first cascade. Hawkish guidance projecting an extended pause could pressure Bitcoin price lower, moving it away from liquidation trigger zones and potentially activating long liquidation clusters below current levels instead.
The combination of Fed communication uncertainty and leveraged positioning makes the December 10 meeting a genuine volatility event despite the rate cut itself being fully priced in. Traders focused on Bitcoin price need to watch Powell’s press conference language on 2026 more closely than the policy statement, while simultaneously monitoring order flow around the $95,000 and $98,000 liquidation zones for signs of cascade dynamics.