Only 45.9% of investors now anticipate an interest rate cut at the upcoming U.S. Federal Open Market Committee (FOMC) meeting in December. This shift comes amid declining market sentiment and a downturn in the cryptocurrency market.
Just a month prior, on November 7, the odds of a 25 basis point (BPS) interest rate cut in December stood at nearly 67%, according to data from the Chicago Mercantile Exchange (CME) Group. In September, several banking institutions had forecasted at least two interest rate cuts in 2025. Market analysts from investment banking firm Goldman Sachs and banking giant Citigroup each projected three 25 BPS cuts in 2025.
Interest rate decisions have a significant impact on cryptocurrency prices. Lower interest rates typically translate into more liquidity flowing into asset markets, propping up prices. Conversely, higher rates tend to constrain liquidity and suppress prices. The declining odds of a December rate cut are fueling negative market sentiment and could indicate more short-term price pain ahead for the crypto market until the Federal Reserve resumes easing rates.
Related: Stablecoin Demand Is Growing, and It Can Push Down Interest Rates: Fed’s Miran
### Federal Reserve’s Jerome Powell Casts Doubt on a December Rate Cut
“There were strongly differing views about how to proceed in December. A further reduction in the policy rate at the December meeting is not a foregone conclusion—far from it. Policy is not on a preset course,” Federal Reserve Chair Jerome Powell said in October.
As expected, the Federal Reserve cut rates by 25 BPS in October. However, cryptocurrency prices continued to decline despite the rate cut. According to Matt Mena, a market analyst at investment firm 21Shares, the October rate cut was “fully priced in” by investors who had widely anticipated it months in advance.
Economist and former hedge fund manager Ray Dalio has warned that the Federal Reserve is cutting rates while asset prices remain at record highs, unemployment is relatively low, and credit spreads are tight—creating a historic anomaly.
In November, Dalio cautioned that the Federal Reserve’s actions may be stimulating the economy into a bubble. He noted that such a scenario is typical of debt-laden economies heading toward hyperinflation and currency collapse.
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