Rising expectations of monetary easing spark hopes that Bitcoin may be nearing a short-term market bottom.
Bitcoin traders found a renewed dose of optimism after the probability of a U.S. Federal Reserve rate cut in December nearly doubled within 24 hours. The abrupt shift in expectations has fueled speculation that monetary easing could help stabilize Bitcoin’s ongoing downturn. With the asset still under pressure, analysts are watching closely for signs that a macro-driven bottom may be forming.
Rate Cut Odds Jump Sharply, Boosting Market Confidence
According to the CME FedWatch Tool, the likelihood of a December rate cut jumped to 69.40%, up from 39.10% just one day earlier. The move followed dovish comments from New York Fed President John Williams, who said the central bank could cut rates “in the near term” without compromising its inflation mandate.
Bloomberg analyst Joe Weisenthal said the remarks were a key reason the odds had “massively increased,” sparking immediate attention across crypto markets.
Crypto analyst Moritz summed up the mood in a post on X:
“Let’s see if that’s enough to find a bottom here for now.”
Bitcoin traded near $85,071, down more than 10% on the week.
Analysts Split Between Caution and Extreme Bullishness
While some experts urged restraint, others saw the setup as unusually strong for risk assets.
Economist Mohamed El-Erian warned investors not to “get carried away,” reminding markets that the Fed’s policy path remains uncertain.
But the crypto community leaned heavily bullish.
“Usually this would be bullish,” analyst Mister Crypto said.
Jesse Eckel was even more direct:
“If you zoom out, the setup is unfathomably bullish… We are going from a tightening cycle into an easing cycle.”
Another commentator, Curb, predicted that “crypto will explode in a massive rally.”
Historically, rate cuts reduce yields on traditional assets like bonds and deposits, pushing investors toward higher-risk markets such as Bitcoin.
Coinbase: Rate Cut Odds Were ‘Mispriced’
A report from Coinbase Institutional argued that markets had underestimated the probability of easing.
The firm noted that futures markets shifted from expecting a cut to expecting a hold after the October FOMC meeting due to rising inflation concerns, but recent data points tell another story.
Coinbase added that research on tariff impacts suggests they can lower inflation and increase unemployment, mimicking a short-term negative demand shock — a dynamic that could justify the Fed easing sooner than markets assumed.
Market Sentiment Still Under Strain
Despite the sudden wave of optimism, overall sentiment remains fragile. The Crypto Fear & Greed Index recorded an “Extreme Fear” score of 14, reflecting persistent caution across the market.
The dramatic jump in rate-cut expectations has offered a rare bright spot for Bitcoin traders searching for a bottom. While uncertainty remains, the shift toward a potential easing cycle is a development many analysts believe could help reverse the recent downtrend — or at least slow its momentum.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.