The newly released FOMC minutes from the Federal Reserve’s October 28-29 meeting have injected fresh uncertainty into the December policy outlook. This has intensified volatility across equity, bond, and cryptocurrency markets. According to Lockridge Okoth’s report, the ambiguity in the document’s language has ignited debate among analysts attempting to decipher the central bank’s next move.
The document reveals a narrow majority against a December rate cut, with “many” officials deeming a rate reduction “likely not appropriate,” while “several” believed a cut “could well be appropriate.” In Fed-watcher parlance, the hierarchy of these words is crucial: “some” < “several” < “many,” indicating that a slim majority opposed cutting rates during the meeting. This internal division suggests that December’s decision will be one of the tightest policy calls since the Fed began its fight against inflation.
Tension in money markets and the future of liquidity
The minutes also indicated emerging stress points in money markets, such as repo volatility, declining ON RRP usage, and reserves drifting toward scarcity. This combination of factors has historically preceded the end of quantitative tightening (QT). Therefore, the general sentiment is that the Fed may be closer than expected to ending balance-sheet runoff, which could ease pressure on global liquidity. However, current uncertainty only adds more fuel to volatility.
On the other hand, prior to the minutes’ release, markets had already begun de-risking, pushing Bitcoin’s price below $89,000 to a seven-month low. This risk-off sentiment spread to crypto stocks and traditional financial indices. The current global economy situation, marked by softer inflation data, stable jobless claims, and cooling retail activity, makes the Fed’s December decision a critical factor for market direction.
Finally, the market is recalibrating to a scenario of tightening liquidity and rising policy uncertainty. Bitcoin, in particular, finds itself in a structurally vulnerable zone until buyers regain the initiative. If the Fed decides to hold rates in December, markets could brace for a longer-than-expected plateau and further volatility in the immediate future, prolonging the current correction phase.
