Bitcoin Sentiment Lifts as December Fed Rate-Cut Odds Surge

• Bitcoin sentiment improves as December Fed rate-cut odds surge to 69.4%, nearly doubling overnight.
• Analysts suggest a potential temporary bottom for Bitcoin, with easing rates possibly driving a bullish rally.
• CME data and Fed comments indicate the market underestimates the likelihood of rate cuts, boosting crypto optimism.

The Bitcoin community has shown more optimism on Friday after the chances for a December interest rate cut from the US Federal Reserve almost doubled overnight. This has again raised questions about whether this could also halt the current downward movement for Bitcoin.

At press time, Bitcoin is $ 84,497 with a 24-hour trading volume of $ 194.50 billion and a market cap of $ 1.69 trillion. BTC price decreased by 1.25% over the last 24 hours, down 12.32% over the past week, according to CoinMarketCap. Despite the drop, several market watchers see improving conditions forming in the background.

Source: CoinMarketCap

CME Data Shows Rate-Cut

According to data provided by the CME Fed Watch Tool, chances for cutting interest rates later in December rose to 69.40% on Friday, surging from 39.10% on Thursday.

Source: CME Group

This emerged after comments by New York Fed President John Williams, who stated that cutting interest rates in the short term will not hinder efforts to control inflation.

Bloomberg analyst Joe Weisenthal said Williams’s remarks are the key reason rate-cut expectations climbed so quickly.

Bitcoin Could Rally as Fed Easing Gains Momentum

“This improved probability can contribute to forming a temporary bottom for Bitcoin,” Moritz explained, “although it must again be stressed that the market lacks confirmation.” Some analysts had no doubts about how this would develop.

“Usually, this would be bullish,” observed Mister Crypto, noting that lower interest rates tend to push bitcoin higher since other interest-rate investments are no longer so attractive.

“The overall environment is very favorable when you look at the bigger economic backdrop,” added analyst Jesse Eckel. “We are exiting a cycle of tightening into a cycle of easing. I don’t know why we need to continue to decline.”

Another analyst, Curb, also emphasized that once the easing cycle begins, “the cryptos will rocket in one massive buying spree.”

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Fed Easing Boosts Bitcoin Optimism

Coinbase Institutional fueled the debate by asserting that the market has failed to factor in the probability of a rate cut. In its post on X, Coinbase Institutional asserted that recent data points, including tariffs, private analysis, and concurrent inflation data, are indicative of the probability of cutting rates, which is higher than the market is showing in derivatives contracts.

Coinbase observed that market expectations for futures contracts are no longer expecting a 25-basis-point cut after the October luncheon to either no change but are primarily driven by inflationary concerns. On the other hand, certain literature reports that increases in tariffs are expected to reduce inflation and generate unemployment in the short term, making it likely for the Fed to cut.

Although there is increasing optimism from certain analysts, overall market sentiment is still delicate. The Crypto Fear & Greed Index registered a reading of 14, reflecting “Extreme Fear” in the market. This is expected, as while prospects for a Fed rate cut appear to be improving, investors are still nervous from a week filled with sharp price movements.

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