Fed Could Cut Rates in December: BTC and ETH Will Start to Rise Again

The US central bank could begin a decisive turning point. Markets now see an 85% chance of a rate cut as early as December, according to the latest data from the CME FedWatch Tool. A rapid development that contrasts with the firmness of recent months. If this scenario is confirmed, it will mark the end of an unprecedented cycle of monetary policy tightening and could destabilize financial markets.

The Fed is moving toward easing monetary policy

The market seems to be expecting a significant change in monetary direction. The odds of a rate cut at the Dec. 9-10 FOMC meeting jumped to 85%, while still largely in the minority the week before, according to data from the CME FedWatch Tool.

 

This rapid turnaround is supported by a series of public statements by the Federal Reserve:

• Fed Governor Christopher Waller said: “If inflation continues to decline in the coming months, it’s entirely possible that the Fed will start cutting rates within a few months”;

• This was noted by San Francisco Fed President Mary Daly “moderating employment could justify easing monetary policy”;

• Current labor market indicators show a slowdown in job creation and stabilization of wage growth;

• This development, combined with controlled inflation, strengthened the market’s belief in the impending monetary easing.

This change in tone is all the more surprising as it contrasts sharply with the caution shown by the Fed in recent months, which has remained focused on the goal of price stability. The signals sent henceforth reveal a shift in monetary policy to avoid weakening the economy too significantly.

Crypts react positively to the expected release

While the debate rages at the Fed, the crypto market seems to have already made up its mind. Bitcoin, the sector’s largest capitalization, hit an intraday high of $88,162 and is now approaching the symbolic $90,000 mark.

Ethereum has advanced more than 1% in the last 24 hours with a clear goal of retrieving $3,000. This dynamic is not limited exclusively to the two main assets. Other major cryptocurrencies such as XRP, ADA, SOL and BNB are also showing an upward trend.

The entire market is benefiting from this wave of optimism so much that the global capitalization of assets has exceeded 3000 billion dollars.

Indeed, investors appear to be integrating the hypothesis of a return to more favorable liquidity conditions into their strategies. This phenomenon is accentuated by other macroeconomic factors, such as the recent announcement that Ukraine has accepted the terms of the peace plan proposed by Donald Trump to end the conflict with Russia, news that reinforces the sense of geopolitical stability and thus the risk appetite in the markets.

The Fed now faces a crucial choice for December. Among the signals of economic slowdown and limited inflation, the variant of monetary easing is being promoted. Markets, led by cryptocurrency, scrutinize every statement. One wrong step and the momentum can break. A rate cut would reshape the current balance sheet, but the final decision remains pending at the next FOMC meeting.

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The comments and opinions expressed in this article are solely those of the author and should not be considered investment advice. Before making any investment decision, do your own research.