- The probability of a December rate cut has surged to 85%, raising hopes of a crypto rally.
- Analysts debate whether a new cut would spark a rally, noting that the previous one had little effect.
- Short-term market sentiment remains cautious, with Bitcoin’s key support as the compass.
Crypto experts look forward to interest rate cuts as a surefire way for crypto to rally, and their wish may be close to being granted – again. Data shows odds of the next rate cut have jumped significantly, but will it be the life-saving catalyst that the market awaits?
Target Rate Probabilities is a metric that measures the probability of rate cuts based on the 30-Day Fed Funds futures prices. It currently shows that the probability of another cut during the December 10 Federal Open Market Committee (FOMC) meeting has skyrocketed to 85%.
As it was with previous times, crypto players are closely monitoring the increasing probability of a cut which is believed to be good for the market.
Will A Rate Cut Trigger the Next Crypto Rally?
The last rate cut in September was highly anticipated but fell short of expectation as it could not deliver the expected outcome. The market continued to bleed and negative sentiment went through the roof right into “Uptober”, a nickname given to October for its Crypto surge reputation.
Crypto experts at the time told Forbes that the market remained flat for Bitcoin, Ethereum and the rest because the cut was already priced in before the day. The question is whether the situation will be different after December 10, assuming the rate cuts happen.
One crypto analyst believes this time will be different and a rate cut will trigger the next rally by the end of the year. His chart indicated a high probability of a 25 basis point cut, which is the same rate as September.
To put it in perspective, a rate cut reduces the interest rates of the Fed, allowing investors to consider risk assets like cryptocurrencies for some quick profits. However, the rally may not come as quickly as expected based on previous market cycles.
Short-term Crypto Market Outlook Remains Bleak
While the crypto community eagerly awaits a rate cut next month, the short-term outlook for the market remains largely bearish. Although Bitcoin shot to $89K recently, its impact wasn’t felt in the wider market as altcoins continue to bleed. Moreover, experts say selling pressure from retailers remains a major hurdle to scale.
However, they are hopeful that Bitcoin holding the major support at $86,000 could trigger the next rally, while a significant drop below that level would push the market deeper into bear territory.
More Must-Reads:
- Bitcoin Defends Key Support With $90k Break on Deck
- XRP Springs Back to Life Off Major Support
- Bitcoin Rebounds to $89k – But Major Hurdle Lies Ahead
What do you think?
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