Officials hinted at an imminent rate cut from the Federal Reserve at Monday’s monetary policy meeting, which could push bitcoin prices above $100,000.
Bitcoin price faces strong resistance at the $100,000 level, with cryptocurrency investors eagerly awaiting a December rate cut by the Federal Reserve to fuel gains. According to the CME FedWatch tool, the probability of a rate cut at the upcoming FOMC meeting on December 18 has surged to 72.5%. Market analysts are predicting a 25 basis point rate cut at the upcoming meeting.
Will Fed rate cuts boost optimism in the cryptocurrency market?
Cryptocurrency market investors are eagerly awaiting a 25 basis point rate cut by the Federal Reserve, bringing rates to a target level of 4.25% to 4.5%. The U.S. central bank currently keeps interest rates in a target range of 4.5% to 4.75%, and has cut rates twice this year, totaling 0.75%, bringing rates down from their highest point in 20 years.
Fed rate cuts are generally good for Bitcoin and the entire cryptocurrency market because they will inject new liquidity into the market. BTC price has been rejected several times at $100,000 and is currently hovering around $96,000. Chris Newhouse, head of research at Cumberland Labs, said:
“While we are seeing strong institutional buying pressure, particularly from entities such as MicroStrategy’s ongoing accumulation strategy, the broader crypto ecosystem is experiencing a diversification of capital flows from both institutional and non-institutional participants”.
One positive development is that inflows into spot Bitcoin ETFs have picked up again. On Monday, total inflows remained at $353 million, with BlackRock’s IBIT alone contributing $338.3 million. Several traditional BlackRock funds have also invested in IBIT in the past few months.
On Monday, December 2, Federal Reserve Board Governor Waller hinted that interest rates may be cut this month, and said at the monetary policy meeting yesterday: "At this time, I tend to support a rate cut," which further increases the possibility of monetary easing.
At yesterday's meeting, New York Federal Reserve Bank President John Williams spoke at the Queens Chamber of Commerce in New York and said he expects interest rates to fall "over time." However, he did not specify whether he would support a rate cut at the upcoming meeting. According to the CME's FedWatch tool, the probability of a rate cut rose by 8 percentage points yesterday after this comment.
Capital Flow Shift from Bitcoin to Altcoins
As Bitcoin price enters a strong consolidation phase, attention turns to altcoins such as Ethereum, XRP, Cardano, etc., which have relatively underperformed BTC after President Trump’s victory. XRP price rally has extended to $2.73, and on-chain indicators show strong investor optimism.
The crypto options market is seeing increasing demand for downside protection for Bitcoin expiring in December. Meanwhile, Bitcoin futures, which show medium leverage, remain subdued after the digital asset peaked at $99,000. Vetle Lunde, head of research at digital asset research firm K33, wrote:
“On-chain data shows that the medium-term group (traders buying in the 55k-70k range) actively realized profits, and profit-taking was particularly intense when BTC was trading above 90k.”
Additionally, investors remain optimistic about upcoming cryptocurrency legislation as Donald Trump takes office as U.S. President next month. Trump has begun appointing pro-cryptocurrency lawmakers to his team and is reportedly working toward the position of “crypto czar” in the White House.