Bitcoin enthusiasts expressed increased optimism on social media today as the odds of a Federal Reserve rate cut in December surged to nearly double the previous day.
Speculations have arisen that this situation could provide Bitcoin (BTC) the opportunity it needs to stop its ongoing price decline.
“Let’s see if that’s enough to find a bottom here for now,” said crypto analyst Moritz in a post on X (formerly Twitter) this Friday, while Bitcoin is priced at $85,071, a 10.11% decrease over the last week, according to CoinMarketCap.
Last Friday, the chances of a rate cut during the Federal Open Market Committee (FOMC) meeting in December soared to 69.40%, a significant rise from a mere 39.10% the day prior, as noted by the CME FedWatch Tool.
Rate cut odds on the rise
The likelihood of a US Federal Reserve rate cut leaped 30.30% on Friday. Source: CME Group
Many market participants linked this spike in odds to dovish comments from John Williams, president of the New York Fed, who stated that the Fed could lower rates “in the near term” without jeopardizing its inflation targets. Bloomberg analyst Joe Weisenthal acknowledged that this was central to the significant rise in odds.
Analyst’s Perspective on Market Sentiment
Warnings have been issued by economist Mohamed El-Erian, urging market participants to remain cautious about overly optimistic responses to these comments. Conversely, the broader crypto community has reacted more positively, with Mister Crypto stating in a recent X post, “Usually this would be bullish.”
Typically, a rate cut by the Fed is considered favorable for riskier assets such as Bitcoin, as investments in traditional assets, including bonds, become less appealing.
Optimism peaks in crypto
Source: Ted
Crypto analyst Jesse Eckel highlighted the increased odds for a rate cut, noting, “If you zoom out, the setup is unfathomably bullish.” He continued, “I don’t understand why we keep decreasing, as we transition from a tightening cycle to one of easing.”
Curb, another crypto analyst, indicated, “Crypto is set to experience a massive rally.”
Potential Rate Cut Mispricing
Coinbase Institutional emphasized, “While markets are currently leaning towards no cut this time, we feel the odds of a cut are actually mispriced. Recent tariff research and real-time inflation indicators indicate otherwise.”
They added that since the last FOMC meeting, market predictions shifted from expecting a 25-basis point cut to a policy hold largely due to inflation concerns.
Current sentiment across the broader crypto landscape remains subdued, with the Crypto Fear & Greed Index reporting an “Extreme Fear” score of 14 in its most recent update.
