Bitcoiners were significantly more optimistic on social media today because the likelihood of a US Federal Reserve rate of interest cut in December has almost doubled in comparison with only a day earlier.
Some crypto market participants are speculating that this could possibly be the catalyst Bitcoin (BTC) must halt the asset's downward trend.
“Let’s see if that is enough to seek out a bottom here for now,” crypto analyst Moritz said in an X post on Friday, while the worth of Bitcoin is trading at $85,071, down 10.11% over the past seven days, in accordance with CoinMarketCap.
On Friday, the percentages of a rate cut on the December Federal Open Market Committee (FOMC) meeting nearly doubled to 69.40%, in accordance with the CME FedWatch Tool. Just the day before, on Thursday, it was almost 30.30% lower at 39.10%.
The probability of a rate cut by the US Federal Reserve increased to 30.30% on Friday. Source: CME Group
Many within the broader market attributed the rise at the very least partially to dovish comments from New York Fed President John Williams, who said the Fed could cut rates of interest “within the near term” without jeopardizing its inflation goal. Bloomberg analyst Joe Weisenthal said this is the reason the percentages have “increased massively.”
The setup looks “incredibly bullish,” says the analyst
However, economist Mohamed El-Erian warned market participants to not be “overwhelmed” by the comments. Meanwhile, the broader crypto community has reacted much more optimistically. “Normally this might be bullish,” Mister Crypto said in an X post on Friday.
The Fed's rate cut is often bullish for riskier assets like Bitcoin and the broader crypto market, as traditional assets like bonds and time deposits turn into less lucrative for investors.
Crypto analyst Jesse Eckel pointed to the rising rate cut possibilities and said: “If you zoom out, the situation is incredibly bullish.”
“I don’t know why we keep sinking,” Eckel said. “We are moving from a tightening cycle to an easing cycle,” he added.
Crypto analyst Curb said: “Crypto is ready to blow up in an enormous rally.”
The possibilities of an rate of interest cut have to this point been “misjudged”
Coinbase Institutional said in an X post on Friday: “While markets are leaning towards 'no rate cut' this time, we consider the probabilities of a rate cut are literally misjudged. Current rate research, private market data and real-time inflation indicators suggest otherwise.”
“Since the October FOMC meeting, futures have shifted from expecting a 25 basis point cut to holding, primarily on account of rising inflation concerns,” Coinbase Institutional said.
“However, studies show that tariff increases can reduce inflation and increase unemployment within the short term, acting as negative demand shocks,” it added.
This comes as sentiment across the crypto market has remained weak over the past seven days. The Crypto Fear & Greed Index, which measures overall sentiment within the crypto market, announced an “Extreme Fear” rating of 14 in its update on Friday.
