Crypto Fund Inflows Surge to $3.55 Billion as Fed Signals December Rate Hike

Crypto demand is surging. Weekly fund inflows hit $3.55 billion last week — the biggest number of 2026 — right as the Federal Reserve signals it’s not done tightening.

The Federal Open Market Committee voted unanimously on September 16 to raise its target range to 3.75%-4%. That was the Fed’s first rate hike since 2023, and it wasn’t a close call. Every single member backed it. J.P. Morgan now thinks one more hike is coming, probably in December, when the FOMC meets on December 9. The bank’s chief U.S. economist, Michael Feroli, has been pretty clear about the reasoning: inflation driven by supply shocks doesn’t necessarily call for a long, grinding hiking cycle. His read is that the Fed gets one more move and then it stops.

Not a protracted cycle.

Feroli put it directly: “Inflation continues to look supply-shock-driven, and as such, we don’t foresee a protracted hiking cycle extending into next year.” That framing matters because it shapes how markets price risk assets — crypto included. If the hiking cycle really does end in December, that’s a different environment than one where rates keep climbing into 2027.

What’s Driving the December Call

The inflation picture is the core of J.P. Morgan’s argument. Core Personal Consumption Expenditures — the Fed’s preferred gauge, which strips out food and energy — has come in above 3% every single month this year. August’s reading landed at 3.4%, which actually came in below the 3.7% that had been expected. Still elevated. Still above where the Fed wants it, but the direction wasn’t what the hawks were bracing for.

Chair Kevin Warsh has been vocal about not letting high inflation become the new normal. Feroli said the September hike was crucial for keeping the Fed’s credibility intact, especially given how strongly Warsh has framed the inflation fight publicly. J.P. Morgan’s December forecast lines up with the median projection on the Fed’s dot plot — the chart each official uses to show where they think rates are headed. That alignment isn’t an accident. It’s basically J.P. Morgan saying the Fed will do what it’s already told you it plans to do.

The October 28 meeting is a different story. New York Fed President John Williams said there’s no immediate urgency for another increase, and traders have adjusted their expectations accordingly. An October skip looks likely.

Five Task Forces and a Possible Dot Plot Overhaul

Warsh has set up five internal task forces to review how the Fed operates. Findings are due by the end of the year. Three of the review areas are getting the most attention right now, though J.P. Morgan doesn’t think any of them will change its near-term rate forecast.

More context: Bitcoin Breaks $85,000 as Inflation Data Falls Short, Easing Rate Hike Fears

First: the dot plot itself. Its future is murky. Feroli flagged that scrapping it without putting something in its place would hurt transparency — markets have built a lot of their rate expectations around that chart, and pulling it cold could create confusion. No clear replacement has been floated yet.

Second: the balance sheet. A smaller Fed balance sheet fits with what Warsh wants, but getting there isn’t simple. It would require significant adjustments to banking regulations and payment systems. That’s not a weekend project.

Third: AI and productivity. Warsh sees artificial intelligence as disinflationary — meaning he thinks it could put downward pressure on prices over time by boosting output. The task force reviewing productivity and jobs will dig into that. J.P. Morgan doesn’t expect any immediate policy shift from that work, but the fact that the Fed is formally studying AI’s economic impact is worth watching.

Any big changes coming out of these reviews need full FOMC support. That basically means gradual. No dramatic pivots.

Crypto’s Stake in All of This

The $3.55 billion in weekly crypto fund inflows is the highest figure recorded in 2026. That number landed the same week the Fed’s rate path became clearer, which isn’t nothing. Rate expectations move risk appetite, and crypto sits firmly in the risk-asset bucket for most institutional allocators.

See also: Trump and Tech Titans Sign AI Self-Policing Pact, Ignoring Federal Oversight

Whether that inflow pace holds through December depends on a lot of things the Fed hasn’t decided yet. If Warsh’s task forces produce surprises — a communication overhaul, a faster balance sheet rundown — markets will reprice. If December goes exactly as J.P. Morgan expects, one hike and done, the backdrop for digital assets probably stays supportive enough to keep institutional money moving in.

But “probably” is doing a lot of work in that sentence. The October 28 meeting comes first, and Williams’ comments already shifted the near-term picture. Traders are watching. Crypto fund managers are watching. And the Fed’s five task forces are still working.

Feroli’s line about supply-shock-driven inflation not requiring a prolonged hiking cycle is the most important thing J.P. Morgan said. If he’s right, December is the last move. If he’s wrong, the $3.55 billion weekly inflow number gets tested fast.