Recently, there’s a saying circulating in the market that sounds pretty counterintuitive—the rate cut in December might not be good news after all, and could actually be a trap.

Major institutions like BNY Mellon have recently hinted: don’t be fooled by the surface-level rate cut—there’s a hawkish undertone behind this move.

# The rate cut is confirmed, but the script could be completely different

The market is almost certain now: a 25 basis point cut in December is a done deal. The question is, what happens after that?

There are three variables that could take the whole story in an unexpected direction:

**First, what if it’s just a one-and-done cut?** If inflation remains stubborn and the economic data isn’t that bad, the Fed could easily stop here. The next rate cut window? Some say it might not come until 2026. That means the market could be stuck in a tightening environment for over a year.

**Second, the leadership change.** The Fed chair is about to be replaced. Will the new chair follow Powell’s style, or be more aggressive or conservative? This uncertainty is huge, and the market will have to place new bets.

**Third, there’s no internal consensus at all.** The dot plot to be released next week will reveal a fact: there are major divisions within the Fed. Some want to keep easing, while others are already considering tightening. It’s like driving a car with one person stepping on the gas and another on the brakes—can the ride be stable?

# The market faces a dilemma

Looking at it now, whichever path the economy takes, the risks are considerable:

- Economy too strong? Inflation will rebound, rate cuts will stop, and tightening might even return.
- Economy too weak? Then recession fears will arise, and risk assets will get hit again.

This creates an awkward situation: the benefits of rate cuts have already been priced in, but no one is sure if future easing policies can be sustained. That’s why you’ll see some smart money shouting about a bull market, but quietly hedging or reducing positions.

Ultimately, this rate cut might not be the start of a liquidity party, but more like a risk disclosure full of fine print. Those who really understand will hear the unspoken warnings amid all the cheers.

The recent price action of mainstream coins like BTC and ETH may also be reflecting these complex sentiments.