The precious metals market has just experienced a "bizarre" plunge. Geopolitical risk aversion should have driven spot gold to surge towards $4,500 per ounce, but instead, Federal Reserve officials engaged in a "shadow fight," sharply pushing gold through the $4,470 level. Silver fared even worse, plunging over 3% intraday, with New York silver futures down 2%. What does this sudden and shocking drop in precious metals reflect? Why is the crypto circle paying close attention to this candlestick?

In simple terms, this is an internal "power struggle" within the Federal Reserve.

Board member Milan is the most aggressive, openly stating that this year he expects over 100 basis points of rate cuts. The current interest rate policy is dragging down economic growth and must be loosened further. On the other end, Barkin takes a different stance, claiming that rates have already reached a neutral level, and now the focus is on finding that delicate balance between employment and inflation. Even more aggressive is voting member Kashkari, who outright said the Fed is "approaching the end of rate cuts." Three individuals, three voices, three completely different policy directions.

This internal "discord" is directly reflected in the futures market expectations. CME data bluntly shows an 81.7% probability of holding rates steady in January, crushing the previously market-driven expectations of rate cuts. Investors are starting to panic—what's the point of cutting rates now?

The key point is the non-farm payroll report this Friday.

The US unemployment rate in November has climbed to 4.6%, the highest in three years. The market expects 55,000 new jobs in December, but can this number hold steady? If the unemployment rate rises further and breaks above 4.7%, Wall Street's smart money has already calculated that there’s a high chance of a 25 basis point rate cut this month. Citibank has even issued a strong warning, predicting that the total rate cuts in 2026 could exceed 60 basis points, far beyond current mainstream market expectations.

Why does the crypto market treat these data as a life-and-death line?

Because the fate and liquidity of cryptocurrencies are tightly linked. Historically, every shift in Federal Reserve policy has caused turbulence in the crypto space. During the last rate-cut cycle, major cryptocurrencies like Bitcoin and Ethereum experienced trillion-dollar market cap fluctuations. The current situation is even more delicate—traditional safe-haven assets like gold are starting to plunge, while Bitcoin hovers near critical support levels, uncertain whether to follow the decline or wait for a new liquidity inflection point.

This rate-cut game is essentially a liquidity battle. When the Fed loosens, more money floods the market, investors seek yields, and the crypto market attracts hot money inflows. Conversely, the opposite is true. The non-farm payroll data will serve as the final signal—either triggering a collapse of "hawkish" rate cut expectations or providing ammunition for "dovish" market rescue narratives.

The pressing question now is: will the non-farm data lean toward the "hawkish" or the "dovish"? If employment data looks good, rate cut expectations will be thoroughly suppressed, the dollar will appreciate, safe-haven assets will decline, and the crypto market may replicate the drop seen in gold and silver. If the data is weak and unemployment continues to rise, rate cut expectations will resurface, presenting a real opportunity for the crypto market to turn around.

Ultimately, this Friday’s non-farm payroll report is not just about the Fed’s interest rate decision; it’s about whether the crypto market can leverage the reversal of rate cut expectations to break free from this gloom.