Fed internal disagreements widen: Doves want to cut interest rates by over 100 basis points, with employment data being the decisive factor

The latest remarks from Federal Reserve Board member Stephen Milun have attracted market attention. He pointed out that the current interest rate policy is “obviously restrictive,” and there is ample reason to believe that rate cuts of “more than 100 basis points” could occur by 2026. This dovish statement contrasts sharply with some officials’ views that policy is already approaching neutrality, highlighting an expanding divergence within the Federal Reserve regarding economic outlook and policy stance. The key question is how this policy divergence will influence market expectations, especially the liquidity environment for crypto assets.

The Nature of Divergence Within the Fed

Dovish vs. Hawkish Divide

There are currently two mainstream views within the Federal Reserve:

• Dovish Representative (Milun): Current interest rates are too high, policy is excessively tight, and significant rate cuts are needed to ease economic pressure
• Hawkish/Neutral: Policy is already near or at neutral levels, with no need for major adjustments

This divergence reflects differing assessments of the economic situation by officials. Milun’s remarks are notably more aggressive, explicitly stating that the room for rate cuts could exceed 100 basis points, which is a quite dovish stance given the current macro environment.

Signals of Growing Divergence

The expansion of internal divergence within the Fed itself is an important signal. It indicates that:

• Officials have significantly different expectations for economic trends
• Policy path uncertainty is increasing
• The market needs more concrete data to assess the Fed’s true intentions

Why Employment Data Is Key

“Employment Checkup” This Week

According to recent reports, the US will release multiple employment indicators this week:

• ADP Employment Report
• JOLTS Job Openings Report
• Initial Unemployment Claims
• Non-farm Payrolls Report

These data points will directly influence the Fed’s assessment of economic resilience.

How Data Will Influence Policy

Employment data is a critical basis for judging whether the economy can withstand high interest rates:

• If employment remains resilient (low unemployment rate, strong job growth), the justification for the Fed to pause rate cuts in the short term will increase, supporting hawkish views
• If employment weakens (rising unemployment, sluggish job growth), the aggressive easing stance represented by Milun will quickly amplify, and expectations for rate cuts will rise significantly

In other words, employment data will determine whether the market moves toward “rate pause” or “preemptive deeper easing.”

Implications for the Crypto Market

Sensitivity of Liquidity Expectations

Policy uncertainty directly impacts liquidity expectations. Currently, the crypto market’s reaction to employment data could be very sensitive, with short-term volatility potentially amplified. Bitcoin’s current price is $92,626.65, down 1.26% over 24 hours, which may reflect lingering market doubts about the policy direction.

Possibility of Structural Support

But from a medium- to long-term perspective, if employment and inflation data both point toward an expanding policy shift space, the market will reassess the liquidity environment. This creates structural support for assets like Bitcoin, which have “monetary attributes.” Bitcoin’s market cap has reached $1.85 trillion, accounting for 58.17% of the total crypto market cap, and its status as “digital gold” and a liquidity-sensitive asset is increasingly established.

Key Observation Focus

The core focus for the crypto market is whether there is a substantive shift in liquidity expectations. If employment data weakens and the Fed indeed embarks on a deeper easing cycle, assets sensitive to liquidity will have opportunities for re-pricing.

Summary

Milun’s dovish remarks are not an isolated event but a concrete reflection of the expanding divergence within the Fed. This divergence will ultimately be “decided” by employment data released this week. For the crypto market, the key is not just the statements of a single official but whether employment data can trigger a substantive policy shift by the Fed. If the data supports a more easing-oriented stance, improvements in liquidity expectations will create structural opportunities for assets like BTC. Conversely, if employment resilience persists, the market should prepare for a pause in rate cuts. The data releases this week will be a critical window for judging this trajectory.