Bloomberg reported today that after Bitcoin broke through the historic high of $108,000 last night, the momentum has cooled, and traders are waiting for the anticipated rate cut by the Federal Reserve. K33 Research analysts believe that today's FOMC meeting may lay the groundwork for Bitcoin's momentum during the Christmas holiday period. (Background: The Federal Reserve's spokesperson indicates a 97.1% probability of a 25 basis point cut in December! Rate cuts may pause next year.) (Additional context: Federal Reserve officials support continued interest rate cuts, and Fed hawks have also indicated that a December rate cut is reasonable.) The U.S. Federal Reserve (Fed) is expected to announce its interest rate decision at 3 AM tomorrow (19th), and the market widely predicts that the Fed will cut rates by another 25 basis points in December. According to the CME FedWatch tool, the market expects a 95.4% probability of a rate cut in December, while the probability of keeping rates unchanged is only 2%. This marks the Fed's third consecutive rate cut since initiating cuts in September, accumulating to a total cut of 1 percentage point, bringing rates to a range of 4.25% to 4.50%. Source: CME FedWatch tool. However, traders currently also predict that the Fed will pause rate cuts starting in January next year, with nearly an 80% probability of keeping rates in the 4.25% to 4.50% range, while the probability of a further rate cut is only 16.3%, which may not be good news for market liquidity. Source: CME FedWatch tool. Traders are waiting for the anticipated rate cut by the Fed. After Bitcoin broke through the historic high of $108,000 last night, it began to pull back, possibly because traders are waiting for the anticipated rate cut by the Fed and assessing the optimism brought by Trump's official confirmation of election victory through the Electoral College today, as well as his support for cryptocurrencies. On Tuesday night, BTC reached $108,365, but by noon today, it had fallen to a low of $103,600, a drop of nearly 4.4%. At the time of writing, it is reported at $103,933, with the 24-hour increase narrowing to about 2.4%. Source: OKX. Before the election, Trump proposed a series of crypto-friendly policies, such as creating a friendly regulatory environment to allow the U.S. to lead the cryptocurrency industry, and even supporting the establishment of a national strategic reserve for Bitcoin, which has led Bitcoin to soar over 59% from about $68,000 at the time of the election due to the 'Trump effect.' This has also caused the Bitcoin holdings of U.S. publicly listed company MicroStrategy to surge, as it is set to be included in the Nasdaq 100 index. The crypto market has fallen into a frenzy, surrounded by optimism. Reports indicate that although many expect the Fed to announce another 25 basis point rate cut tomorrow, the strong growth of the U.S. economy and the inflation risks implied by Trump's tax and immigration policy agenda make the Fed's policy outlook unclear. Further reading: Federal Reserve's spokesperson indicates a 97.1% probability of a 25 basis point cut in December! Will Bitcoin rise further after the Fed's rate cut? K33 Research analysts Vetle Lunde and David Zimmerman wrote in a report: "We expect this week's Federal Open Market Committee (FOMC) meeting to exacerbate market volatility. After the meeting, the overall economic situation may enter a calm period in the coming weeks, which could further lay the groundwork for Bitcoin's momentum during the Christmas holiday." 0x Research's analysis based on trading models indicated that by January 20, 2025, when Trump is inaugurated, Bitcoin could soar to $120,000, and the probability of this happening is estimated at 83.33% according to the model. However, some analysts emphasize that "chasing Bitcoin at current levels requires caution." Additionally, some anonymous experts have indicated to Dong District Analysis that the current BTC price may have already been priced in (meaning the event or information has been anticipated by the market and reflected in the price), as the market had previously widely expected a rate cut, leading to overall optimism. Under this premise, if the Fed cuts rates tomorrow as expected, the market may see a decline due to the over-expectation of positive news, but it would likely be a slight correction. However, there is also a very small chance that the Fed may announce a pause in rate cuts, mainly because some Fed officials have mentioned slowing the pace of rate cuts, or even raising rates to curb inflation, but this view is likely a minority and unlikely to gain majority support. However, if such a no-cut scenario occurs, it could trigger a significant market downturn. Related reports: U.S. unemployment rate boosts 25 basis point cut in December! Grayscale predicts: Crypto gains will continue until 2025. Will Bitcoin have a Christmas rally? Analysis of the past 10 years of BTC historical data tells you. Breaking news! Bitcoin breaks through $106,600, analysts are optimistic: Trump’s presidency could push it to $120,000. BlackRock releases a 3-minute Bitcoin educational video: BTC is no longer a radical idea, but has become an emerging global currency alternative. "Bitcoin drops below $104,000) Tonight's Fed rate cut probability exceeds 95%, but will it pause next year?" This article was first published in Dong District BlockTempo (Dong District Trends - the most influential blockchain news media).

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