Bitcoin Enthusiasts Optimistic as December Fed Rate Cut Probabilities Surge
Bitcoin Community Reacts to Fed Rate Cut Odds
Bitcoin investors are expressing increased optimism as the likelihood of a US Federal Reserve rate cut in December has almost doubled from the previous day. The crypto community speculates that this could potentially reverse Bitcoin's downward trend.
"Let's see if this is enough to stabilize the market for now," crypto analyst Moritz commented on X. Bitcoin's price is currently at $85,071, marking a 10.11% decline over the past week, according to CoinMarketCap.
December Rate Cut Odds Surge
The probability of a rate cut at the December Federal Open Market Committee meeting rose to 69.40% on Friday, according to the CME FedWatch Tool, up from 39.10% the day before. This surge is partly attributed to New York Fed President John Williams' dovish remarks, suggesting potential rate cuts "in the near term." Bloomberg analyst Joe Weisenthal noted that these comments significantly increased the rate cut odds.
Market Analysts Weigh In
Despite the enthusiasm, economist Mohamed El-Erian cautioned against overreacting to the comments. Meanwhile, the broader crypto community remains bullish. "Typically, this scenario would be bullish," Mister Crypto stated on X.
Lower interest rates generally favor riskier assets like Bitcoin as traditional investments become less appealing. Crypto analyst Jesse Eckel pointed to the rising rate cut odds, stating, "If you look at the bigger picture, the setup is incredibly bullish." He added, "We are transitioning from a tightening to an easing cycle." Crypto analyst Curb predicted a significant rally in the crypto market.
Mispricing of Rate Cut Odds
Coinbase Institutional remarked that the odds for a rate cut are "mispriced." Recent research and inflation indicators suggest otherwise. Since the October FOMC meeting, futures have shifted from anticipating a 25bps cut to favoring a hold due to rising inflation concerns. However, studies indicate that tariff hikes may reduce inflation and increase unemployment, acting as negative demand shocks.
Overall sentiment in the crypto market remains weak, with the Crypto Fear & Greed Index showing an "Extreme Fear" score of 14.