The Federal Reserve's interest rate cut expectations have pushed Bitcoin prices to rise significantly, with traders betting on a 97% probability of a rate cut tomorrow morning.
On the eve of the announcement of the Federal Reserve's interest rate meeting results in December, Bitcoin's price saw a significant increase, briefly reaching an intraday high of $94,600 yesterday, with a 24-hour increase of 2.6%. The market generally believes that the core driving force behind this surge is the interest rate cut expectations that have been largely digested.
The core driving force is extremely high market expectations. As of the time of writing, data from the prediction market Polymarket shows that traders are betting on a 97% probability of the Federal Reserve cutting rates by 25 basis points in tomorrow's early morning interest rate meeting.
This strong consensus has prompted some funds to position themselves in Bitcoin and other risk assets considered sensitive to interest rates in advance, anticipating that loose monetary policies will bring liquidity benefits.
Dramatic price fluctuations have also triggered large-scale liquidations of leverage. Data shows that in the past 24 hours, the total amount of liquidations across the network reached $431 million, of which $309 million came from short sellers, further accelerating and amplifying the upward momentum in prices.
In summary, the core reason for Bitcoin's rise this time is the self-reinforcing effect created by the high certainty of interest rate cut expectations and the liquidation of short leverage before key macro events.
However, the real test will be after the interest rate decision is announced in the early morning; we will see whether the market reacts with a pullback of "good news fully priced in" or continues to rise based on new expectations for future interest rate paths. We will wait and see.
