Crypto Journalist
Amin Ayan
Crypto Journalist
Amin Ayan
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Bitcoin traders turned noticeably more optimistic on Friday after the probability of a US Federal Reserve rate cut in December nearly doubled within 24 hours, injecting fresh hope into a market that has been sliding for weeks.
Key Takeaways:
- Fed rate-cut odds jumped from 39% to 69%, sparking renewed optimism among Bitcoin traders.
- Analysts say a shift from tightening to easing could fuel a strong BTC rebound.
- Some warn not to overreact, arguing the market may be reading too much into one dovish speech.
The shift in expectations has already sparked speculation that a policy pivot could help Bitcoin stabilize after its latest downturn.
Bitcoin is trading around $85,071, down more than 10% over the past week, according to CoinMarketCap.
The catalyst arrived from the CME FedWatch Tool, which showed the odds of a December rate cut jumping to 69.40% on Friday, up from 39.10% just a day earlier.
Analysts pointed to remarks from New York Fed President John Williams, who said the central bank could lower rates “in the near term” without jeopardizing its fight against inflation, language that markets interpreted as strongly dovish.
Bloomberg analyst Joe Weisenthal said Williams’ comments were the primary reason the odds “massively increased,” while social media sentiment among Bitcoiners quickly shifted toward optimism.
Crypto analyst Moritz wondered whether the surge in rate-cut odds would finally be enough to help Bitcoin “find a bottom.” Others were far more bullish.
“Usually this would be bullish,” Mister Crypto wrote, as traders debated whether the Fed’s stance could revive demand for risk assets.
Rate cuts typically push investors toward assets like Bitcoin, as yields on traditional instruments fall. Several analysts said the macro backdrop now favors a reversal.
Crypto commentator Jesse Eckel called the setup “unfathomably bullish,” pointing to the economy’s transition from a tightening cycle to an easing one.
“I don’t know why we keep going lower,” he said. Analyst Curb went further, predicting that crypto “will explode in a massive rally.”
However, not everyone is convinced. Veteran economist Mohamed El-Erian urged traders not to get “carried away,” warning that markets may be reading too much into a single speech.
Coinbase says rate-cut bets were “mispriced”
In a note on Friday, Coinbase Institutional argued that futures markets have been underestimating the chances of a rate reduction.
“We believe the odds for a rate cut are actually mispriced,” the firm wrote, citing new tariff research, private-sector data, and real-time inflation trackers.
Coinbase said traders shifted from expecting a 25 bps cut to assuming the Fed would hold rates steady after inflation reports earlier this quarter raised concerns.
However, tariff effects, the firm noted, often reduce inflation and raise unemployment in the short term, effectively acting as a drag on demand and strengthening the case for cuts.
As reported, Bitcoin may remain stuck between $60,000 and $80,000 through the end of December if the Federal Reserve leaves interest rates unchanged at next month’s FOMC meeting, according to new analysis from XWIN Research Japan.
Analysts say a cautious Fed, still facing inflation near 3%, would likely maintain tight conditions, which historically weigh heavily on equities and crypto.
If no cut arrives, XWIN expects the market to remain range-bound, with risk appetite muted until macro clarity returns.
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