The Federal Reserve's rate cut "hawkish script" triggers a market butterfly effect! Who are the winners: Bitcoin, the US dollar, or US stocks?

The Federal Reserve’s interest rate decision is imminent. On the evening of December 10th, Eastern Time, a new round of rate announcements is about to be released, and this decision is expected to have a significant impact on the market. Several institutions including JPMorgan Chase and Deutsche Bank have issued warnings, suggesting that this week may see a “hawkish rate cut”—a slight decrease in interest rates while maintaining a cautious stance.

Is the US dollar the “biggest winner” of the rebound?

If Jerome Powell emphasizes during the press conference that the conditions for further rate cuts in early 2026 are stringent, implying a pause in rate cuts in the short term, the US dollar will experience a strong rebound. Such hawkish signals will directly push up the US dollar index, impacting the EUR/USD exchange rate—European currencies face downward pressure.

Nomura estimates that the EUR/USD target this week is 1.17, with a potential recovery to 1.18 by the end of the year. In contrast, the USD/JPY trend is divided due to differing views within the Bank of Japan—Bank of America Securities expects yen depreciation and a stronger dollar, while HSBC remains cautious about the yen outlook. Investors should pay close attention to the Bank of Japan’s decision on December 19th next week.

US stocks and gold both under pressure

JPMorgan Chase pointed out that after rate cuts are implemented, US stock gains may face profit-taking, and market momentum could stagnate. Investors tend to lock in gains before the end of the year rather than take on new positions. Nevertheless, medium-term factors such as further easing by the Federal Reserve, easing trade uncertainties, and AI technology development support the stock market.

Regarding gold, if the Federal Reserve adopts a hawkish stance, dollar appreciation will be a direct negative for gold. State Street Global Advisors believes that after gold surged in 2025, its upward momentum may slow next year.

Bitcoin’s “savior”: liquidity shift

For the crypto market, the real catalyst is the Federal Reserve’s attitude toward systemic liquidity. The market expects the Fed may announce the launch of the “Reserve Management Purchase Program” (RMP), marking the first sustained expansion signal since quantitative tightening. Bitcoin is far more sensitive to liquidity cycles than to policy rate changes.

Currently, Bitcoin is trading at $87.61K. If Powell acknowledges labor market vulnerabilities and clarifies RMP details, Bitcoin will benefit and rise; conversely, if he emphasizes caution or delays disclosing the plan details, it will put heavy pressure on crypto assets.