Traders and crypto investors alike are scrambling to recalibrate their expectations after the probability of a December rate cut by the U.S. Federal Reserve tumbled to just 33%. At the start of November, markets were pricing in a 67% chance of easing, but renewed hawkish signals from policymakers have sent both interest rate forecasts and cryptocurrency prices sliding.
Macro Shifts Undermine Rate Cut Hopes
Fresh labor data and persistent core inflation readings have reinforced the Fed’s determination to hold rates higher for longer. Comments from key Federal Reserve speakers this week emphasized caution, dampening hopes for a policy pivot before year-end. As a result, the benchmark yield on two-year Treasuries climbed and rate-cut odds collapsed, marking one of the steepest reversals in Fed expectations seen this cycle.
Bitcoin’s Breakdown Under $89K
Bitcoin’s price performance has mirrored the broader risk-off sentiment. After briefly holding above $95,000 in early November, BTC has steadily surrendered gains and dipped below the $89,000 threshold. The drop reflects unwinding leveraged positions and a shift of capital back into short-term fixed income as traders adjust to a more prolonged high-rate environment.
Altcoins Feel the Pressure
Ethereum and other major altcoins have also been swept up in the downturn. Ether slid back toward $6,000, while several layer-2 tokens and DeFi governance coins saw double-digit percentage losses this week. Liquidity pools are thinning, and on-chain data reveals a spike in stablecoin inflows, suggesting investors are seeking safety amid heightened volatility.
Investor Sentiment and Market Correlation
Crypto sentiment gauges have flipped bearish as correlations with equities and interest-rate-sensitive tech stocks strengthen. With hedge funds and algorithmic traders reducing exposure, on-exchange net outflows of Bitcoin have accelerated. Surveyed participants now rank Fed policy risks and macro headwinds ahead of traditional crypto-specific catalysts such as the upcoming halving event.
Looking Ahead
Eyes are now on upcoming U.S. inflation figures and the minutes from the most recent Fed meeting for clues on the trajectory of monetary policy. A sustained pickup in volatility could create buying opportunities for long-term crypto bulls, but for the moment, the consensus has shifted: a December rate cut is no longer a foregone conclusion and digital assets are bearing the brunt of renewed hawkish resolve.