CME: ~89% Odds Fed Cuts 25bp in December; ~67% Chance of 25bp by Jan

Published: 2025-12-02 23:27:04 |

CME FedWatch shows market-implied odds that the Federal Reserve will cut interest rates by 25 basis points at the December meeting (around 89% probability) and a much smaller chance it will hold rates steady (~11%). Markets price a 66–67% chance of a cumulative 25bp cut by January 2026 and a 25–26% chance of cumulative 50bp easing by then; the probability of unchanged rates by January is under 8–10%. These probabilities come from futures pricing and are used widely to price interest-rate sensitive assets. For crypto traders, rising odds of Fed easing typically support risk assets by lowering short-term yields, strengthening carry and leverage strategies, and potentially boosting demand for higher-beta crypto like BTC and ETH. However, the market still prices a meaningful chance of larger or delayed easing, which can increase volatility in the near term and prompt rapid rotations between risk-on and risk-off positions. This is market data only and not investment advice.

Bullish

Higher market-implied odds of a Fed rate cut (25bp in December and roughly 66–67% chance of 25bp by January) lower expected short-term yields and reduce the opportunity cost of holding non-yielding assets. Historically, easier US monetary policy supports risk assets and capital flows into higher-beta markets, including major cryptocurrencies such as BTC and ETH. In the short term, the elevated probability of easing can fuel rallies, increased leverage, and tighter correlation with risk-on assets. However, the priced-in chance of larger or delayed easing (25–26% chance of 50bp by January and a non-zero chance of no change) raises the risk of volatile reversals if futures repricing diverges from Fed communications or macro data. For traders this means a generally bullish bias but with the need for active risk management: watch Fed communications, US economic data releases, real yields, and dollar strength for triggers that could quickly flip sentiment. Position sizing, use of stops, and monitoring funding rates on perpetual futures remain crucial.