Traders Bet 57% Chance of December Fed Rate Cut
Traders have increased bets on a Fed rate cut at the December FOMC meeting following comments from Fed Governor John Williams. Expectations of a Fed rate cut rose after Williams said rate reductions could occur “soon,” driving short-term interest rate futures to imply a 57% chance of a December cut, up from below 50%. This rise in the implied probability shows markets shifting toward expectations of further monetary easing. Many traders are now adjusting fed funds futures positions to price in a third consecutive rate cut, anticipating the Federal Reserve’s support for economic growth.
Bullish
Fed rate cuts tend to lower borrowing costs and weaken the US dollar, which often benefits risk assets like cryptocurrencies. When traders ramp up bets on December rate cuts, it reinforces expectations of easier monetary policy. Historically, Fed easing cycles have coincided with crypto rallies; for example, after 2020 rate cuts, Bitcoin surged as liquidity increased. In the short term, increased rate-cut odds could boost crypto demand as investors seek higher yields. Over the long run, sustained lower rates may support continued capital inflows into digital assets. However, traders should watch inflation data and Fed communications, as any deviation from expected easing could trigger volatility. Overall, higher probability of Fed rate cuts is likely bullish for crypto markets both immediately and over a longer horizon.