FOMC

Jerome Powell

Chair

Reserve

The US Federal Reserve’s decision to ease monetary policy is inflating an economic bubble that could drive up the prices of hard assets, but also marks the final phase of a 75-year economic cycle, according to former hedge fund manager Ray Dalio.
Typically, the <a href="https://cointelegraph.com/news/federal-reserve-expected-to-slash-rates-here-how-it-may-impact-crypto" rel="noopener noreferrer nofollow">Federal Reserve eases interest rates</a> when economic activity is stagnating or declining, asset prices are falling, unemployment is high and credit dries up, as seen during the Great Depression of the 1930s or the 2008 financial crisis, Dalio wrote in an <a href="https://x.com/RayDalio/status/1986167253453213789" rel="noopener noreferrer nofollow" target="_blank">article posted to X on Wednesday</a>.
However, the Fed is now easing monetary policy at a time of low unemployment, economic growth and rising asset markets, Dalio wrote, which is typical of late-stage economies saddled with too much debt.&nbsp;
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 <img alt="Bitcoin Price, Economics, Economy, Interest Rate, National Debt" src="https://s3.cointelegraph.com/uploads/2025-11/019a5a14-7667-7e62-bbc7-a7db48bd1fcc" title="">
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 Monetary stimulus is typically injected during times of falling inflation and lower asset prices. Source: Ray Dalio
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This “dangerous” combination is more inflationary, Dalio wrote, warning investors to keep an eye on upcoming fiscal and monetary decisions.
<blockquote>
 “Because the fiscal side of government policy is now highly stimulative, due to huge existing debt outstanding and huge deficits financed with huge Treasury issuance — especially in relatively short maturities — quantitative easing would effectively monetize government debt rather than simply re-liquify the private system.”
</blockquote>
The continued inflationary pressure and currency debasement are positive catalysts for Bitcoin (<a href="https://cointelegraph.com/price-indexes" rel="noopener noreferrer nofollow">BTC</a>), gold and other store-of-value assets, which are seen as <a href="https://cointelegraph.com/news/bitcoin-debasement-trade-jpmorgan" rel="noopener noreferrer nofollow">hedges against macroeconomic and geopolitical risks</a>, including a <a href="https://cointelegraph.com/news/ray-dalio-global-monetary-order-on-brink-breakdown" rel="noopener noreferrer nofollow">reset of the global monetary order</a>.&nbsp;&nbsp;<iframe width="100%" height="315" src="https://www.youtube.com/embed/FLwhQK3_iWw?start=" frameborder="0" allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen loading="lazy" sandbox="allow-scripts allow-same-origin allow-popups allow-forms"></iframe>
Related: <a href="https://cointelegraph.com/news/debasement-trade-narrative-fueling-crypto-rally" rel="noopener noreferrer nofollow">‘Debasement trade’ is no longer a debate, and TradFi knows it: Execs</a>
<h2 id="investors-are-unsure-about-fed-s-next-move">Investors are unsure about Fed’s next move</h2>
“There were strongly differing views about how to proceed in December,” Federal Reserve Chair Jerome Powell said in October. “A further reduction in the policy rate at the December meeting is not a foregone conclusion — far from it.”
Over 69% of investors predict a 25 basis-point interest rate cut at the next Federal Open Market Committee meeting in December, according to <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html" rel="noopener noreferrer nofollow" target="_blank">data</a> from the Chicago Mercantile Exchange.
<figure>
 <img alt="Bitcoin Price, Economics, Economy, Interest Rate, National Debt" src="https://s3.cointelegraph.com/uploads/2025-11/019a5a17-e7ed-7685-9e53-57c98692c8e0" title="">
 <figcaption style="text-align: center;">
 Target rate probabilities for the December FOMC meeting. Source: <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html" rel="noopener noreferrer nofollow" target="_blank">CME Group</a>
 </figcaption>
</figure>
The Fed <a href="https://cointelegraph.com/news/fomc-cuts-interest-rates-already-priced-in" rel="noopener noreferrer nofollow">slashed interest rates by 25 </a>basis points in October, but the cut, which would usually be a positive price catalyst for crypto assets, <a href="https://cointelegraph.com/news/crypto-markets-rate-cuts-us-china-negotiations" rel="noopener noreferrer nofollow">failed to lift markets</a>.
The rate cut was “fully priced in” by investors, who widely anticipated the decision ahead of the meeting, according to Matt Mena, a market analyst at investment company 21Shares.
Magazine: <a href="https://cointelegraph.com/magazine/crypto-bull-run-china-bitcoin-herbert-sim-hall-of-flame/" rel="noopener noreferrer nofollow">China will intensify Bitcoin bull run, $1M by 2028: Bitcoin Man, X Hall of Flame</a>

Ray Dalio warns Fed is stimulating the economy into a bubble

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