Gold has fallen below the $4,200 mark, while the US Treasury yield curve is steepening sharply—two signals that shouldn’t appear simultaneously, yet they’re sparking a cognitive storm on Wall Street. Traders are frantically betting on a rate cut in December (with the probability surging to 85%), but seasoned players sense something’s off: this could be the most dangerous “gentle trap” in Fed history.

**Rate Cut? Don’t Pop the Champagne Just Yet**

On the surface, it looks like easing, but in reality, it could be a triple whammy:

**First Punch: Rhetorical Trap**
Powell is highly likely to play word games—“A rate cut doesn’t mean an easing cycle.” The dot plot will set strict conditions for further cuts in 2026: either unemployment must break above 5% (currently only 4.4%), or core PCE must fall below 2.3% (currently hovering at 2.8%). In other words, after this cut, there might not be another.

**Second Punch: Liquidity Assassination**
The seemingly inconspicuous new rule on December 1 is the real killer—stopping balance sheet reduction while shifting purchases to short-term debt. Sounds like easing? In reality, it passively pushes up long-term rates. For assets like BTC that depend on valuation models, it’s like adding water to the gas tank.

**Third Punch: Political Sacrifice**
Powell is about to hand over the reins; this is his last FOMC meeting. To pave the way for his successor, he needs to reinforce his “hawkish” persona. Crypto markets? Sorry, they might just be the unlucky sacrificial lamb. Looking back at the hawkish rate cut in 2019, BTC got slashed by 53%—will history repeat itself this time?

**The Market Is Already Overhyped**

The data doesn’t lie: the S&P 500’s energy sector recently dropped 1.28%, and materials fell 0.82%—a signal that smart money is retreating. Since November 21, Bitcoin has surged over 16%, meaning the good news has already been fully priced in.

The folks at JPMorgan are already sounding the alarm: when the rate cut actually happens, US stocks could plunge as profit-takers rush out. Liquidity in crypto is already fragile—will it be collateral damage?

The script for this game could be: give you the “sweet” of a rate cut, then whip it back with hawkishness. Those betting on a one-sided market, be careful not to end up the last one holding the bag.