Markets are heading into the week with all eyes on the FOMC, and shifting odds for a rate cut are fueling expectations for an end-of-year rally. At the same time, political signals around the next Fed chair are adding a new layer to the macro outlook. Here’s what it could mean for risk assets and crypto heading into 2026.
This upcoming week is going to be driven by the FOMC rate decision. This will set the tone for the EOY sentiment.
The FOMC rate decision odds continue to shift closer towards a -25bps rate cut.
To me this makes the markets favor an EOY rally for crypto and risk assets.
Chart: CME FedWatch Tool
Another major driver of the monetary policy / risk-sentiment environment will be the president’s pick for the Fed Chairman going forward.
Trump is expected to name his pick in early 2026. The next chairman still needs to be approved by the Senate and then take over in May 2026 (after Powell’s term).
President Trump is leaning towards Kevin Hassett for Federal Reserve chair. He shows loyalty towards Trump.
Kevin Hassett is currently the National Economic Council (NEC) director. The (NEC) is in charge of implementing and coordinating the white house’s economic agenda across the various federal agencies. Therefore, Kevin already has a close working relationship with Trump.
In a way, making Hassett the Fed chairman is like extending the role of implementing the White House’s economic vision through monetary policy.
Trump wants to smash the front-end of the rates curve lower and Bessent wants to refi US Treasury debt at the front-end of the curve.
This move would likely pump risk-assets and steepen the yield curve. Lower front-end rates would also help fund the AI CaPex boom.
We’re seeing yield curve steepening around the world right now as global inflation and debt refinancing factors come into play.
(click here for report)
The PCE, which is used to measure the Fed’s target inflation of +2.0%, came in at +2.8% year-over-year (it was +2.9% on the prior release).
This bodes well for the inflation trends.
At the same time ADP released it’s private payrolls which showed that the jobs were down -32k in November.
The drop in jobs was concentrated in small companies and supports the idea that the jobs market is softening.
Together these trends likely point us towards Fed cut… but the markets will be watching to see if the rate cut is dovish or hawkish.
BTC: $91,227 (+0.7% / 7-day)
ETH: $3,108 (+0.9% / 7-day)
SOL: $133.89 (-1.4% / 7-day)
Last week the market for BTC opened with weakness on the back of BOJ interest rate hike speculation.
Let’s remember that in August of 2024 the BOJ rate hike caused volatility markets to explode as risk-assets dropped sharply.
Chart: VIX daily chart (thinkOrSwim)
Today’s volatility environment doesn’t seems nearly as sensitive to the BOJ interest rate regime.
BTC held support nicely and created a nice “base” for us to trade from for the EOY December expiration environment.
Chart: BTC spot (finviz.com)
We can see that the $82k-$84k range has been tested twice now and the $94k level is a price of resistance for us to get through…
According the option GEX levels the $100k mark would be the upside price level to watch next during an EOY rally.
Chart: Deribit Gamma Exposure BTC options
I continue to think the call-spread 1x2 here is THE play into EOY.
Chart: DVOL index (pro.amberdata.io)
Chart: BTC Realized Volatility Cone (2yrs) (pro.amberdata.io)
Chart: BTC term structure and VRP (pro.amberdata.io)
Chart: BTC ∆25 RR-Skew (pro.amberdata.io)
Another decent trade would be selling puts (or put structures) into the EOY expiration.
Given the current volatility levels, term structure and the currently priced put skew. There’s a bit of curvature juice worth squeeze there.
BTC
ETH
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