Crypto Markets Stabilize as Fed Rate Cut Expectations Rise

Cryptocurrency markets regained footing Monday, with total market capitalization climbing 1.5% to $3.02 trillion as investors priced in growing expectations for a Federal Reserve rate cut in December following recent market turbulence.

Bitcoin traded at $87,657, up 0.16% over 24 hours, while Ethereum advanced 2.08% to $2,913 and Solana gained 3.01% to $137.84, per Coinmarketcap data. The recovery followed last week's sharp selloff that saw Bitcoin briefly touch $81,000 and triggered $2 billion in liquidations across crypto markets over two days.

The stabilization tracks broader risk asset strength, with U.S. equity futures pointing higher and European stocks rallying in early trading. The STOXX 600 rose 0.5% after ending last week down 2.2%, while Nasdaq futures climbed 0.8% and S&P 500 futures advanced 0.55%, Reuters reported.

Market sentiment shifted after influential Federal Reserve policymaker John Williams said Friday that interest rates could fall "in the near term," raising prospects for another rate cut in December. Fed funds futures now indicate approximately 60% probability of a 25 basis point cut next month.

"We expect another Fed cut in December, followed by two more moves in March and June 2026 that take the funds rate to 3-3.25%," Goldman Sachs chief economist Jan Hatzius wrote in a note, Reuters reported. He added that risks for next year tilt toward more cuts as underlying inflation news has been favorable.

However, uncertainty persists following a recent U.S. government shutdown that created gaps in economic data. The Bureau of Labor Statistics cancelled the release of October's consumer price report because the shutdown prevented data collection, leaving policymakers with limited fresh information ahead of the December meeting.

"We see the chance of a cut next month as 50/50. Given limited new data, it would be reasonable for the Fed to wait until January," said Paolo Zanghieri, senior economist at Generali Investments. He cautioned that market expectations for nearly four cuts next year "appear too optimistic."

The week ahead brings potential market catalysts including U.S. retail sales and producer price data Tuesday, the Federal Reserve's Beige Book Wednesday, and U.K. Finance Minister Rachel Reeves' budget announcement Wednesday. Markets will be closed Thursday for Thanksgiving.