Bitcoin supporters expressed renewed optimism today as the chances of a rate cut from the US Federal Reserve in December surged nearly twofold compared to just yesterday.

Participants in the cryptocurrency market speculate that this change could provide Bitcoin (BTC) with the necessary support to stop its current downward trend.

“Let’s see if that’s enough to find a bottom here for now,” said crypto analyst Moritz in a post on X, as Bitcoin was trading at $85,071, reflecting a 10.11% decline over the past week, according to CoinMarketCap.

On Friday, the likelihood of a rate cut during the upcoming December Federal Open Market Committee (FOMC) meeting nearly doubled to 69.40%, according to the CME FedWatch Tool. In contrast, the same odds were at 39.10% just a day before, showcasing a remarkable shift.

Odds of US Federal Reserve rate cut increased significantly. Source: CME Group

The broader market attributed this surge partly to the dovish remarks made by John Williams, president of the New York Fed, who indicated that the Fed could reduce rates “in the near term” without jeopardizing its inflation targets. Bloomberg analyst Joe Weisenthal noted that this was a significant factor in the odds increasing so drastically.

Analyst Signals Unprecedented Optimism

Nonetheless, economist Mohamed El-Erian cautioned market players not to become overly optimistic based on these comments. Conversely, the broader crypto community has reacted in a more positive manner. “Typically, this would be seen as bullish,” said Mister Crypto in a Friday post on X.

When the Fed reduces rates, it is generally favorable for riskier assets like Bitcoin, as traditional investments such as bonds and term deposits become less appealing to investors.

Image source: Ted

Crypto analyst Jesse Eckel pointed to the increasing odds of rate cuts, stating, “If you zoom out, the setup is unfathomably bullish.” He further elaborated, “I don’t understand why we keep declining; we are transitioning from a tightening to an easing cycle.”

Curb, another crypto analyst, also contributed to the conversation, asserting that “Crypto will experience a significant rally.”

Rate Cut Expectations Previously Miscalculated

Coinbase Institutional remarked on X, “While the market currently leans towards a ’no cut’ this time, we believe the rate cut odds have been mispriced. Recent tariff research, private market insights, and real-time inflation metrics indicate otherwise.”

Since the October FOMC meeting, market futures shifted from predicting a 25bps cut to anticipating no change, primarily due to escalated inflation worries, according to Coinbase Institutional.

“However, reports suggest that increased tariffs can reduce inflation and heighten unemployment in the short term, acting similarly to a negative demand shock,” their statement added.

This perspective arises amidst persistently weak sentiment throughout the crypto market over the past week, with the Crypto Fear & Greed Index denoting an “Extreme Fear” score of 14 in its latest update.

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