Rate hike expectations are heating up again! The odds of a rate hike in October are nearing 65%, and the betting on a total of 50 basis points of hikes by year-end is even higher 🔥
On September 28, the latest market pricing from the CME “FedWatch” tool showed that the probability of the October meeting keeping the policy rate unchanged at 3.75%-4.00% is only 35.2%, while the probability of a 25-basis-point hike has already risen to 64.8%.
Even more noteworthy is December: the market currently assigns only a 7.6% probability to keeping the current rate through year-end, a 41.6% probability to cumulative 25-basis-point hikes, and a 50.9% probability to cumulative 50-basis-point hikes.
Plainly put, the market no longer seems to believe that the US’s interest rates will fall soon—instead, traders are seriously pricing in the “continue hiking” scenario.
Of course, these are market probabilities inferred from federal funds futures, not an official decision already made by the Fed. As incoming data on inflation, employment, and energy prices continues to change, the probabilities will be repriced accordingly.
But for the crypto market, this signal is definitely worth closely watching.
**The more hawkish the rate expectations, the more likely liquidity conditions will tighten, and the pressure on BTC, ETH, and high-beta altcoins may also increase.** So going forward, don’t just stare at K-line up and down—this macro rates line may be the key variable that drives market momentum.
The more complicated the market is, the less you should get carried away.
Understand the funding environment first, then decide how to trade; survive first, and then talk about catching the big move.
Follow me and keep using plain language to break down the funding logic between the Fed, macro data, and the crypto market.
On September 28, the latest market pricing from the CME “FedWatch” tool showed that the probability of the October meeting keeping the policy rate unchanged at 3.75%-4.00% is only 35.2%, while the probability of a 25-basis-point hike has already risen to 64.8%.
Even more noteworthy is December: the market currently assigns only a 7.6% probability to keeping the current rate through year-end, a 41.6% probability to cumulative 25-basis-point hikes, and a 50.9% probability to cumulative 50-basis-point hikes.
Plainly put, the market no longer seems to believe that the US’s interest rates will fall soon—instead, traders are seriously pricing in the “continue hiking” scenario.
Of course, these are market probabilities inferred from federal funds futures, not an official decision already made by the Fed. As incoming data on inflation, employment, and energy prices continues to change, the probabilities will be repriced accordingly.
But for the crypto market, this signal is definitely worth closely watching.
**The more hawkish the rate expectations, the more likely liquidity conditions will tighten, and the pressure on BTC, ETH, and high-beta altcoins may also increase.** So going forward, don’t just stare at K-line up and down—this macro rates line may be the key variable that drives market momentum.
The more complicated the market is, the less you should get carried away.
Understand the funding environment first, then decide how to trade; survive first, and then talk about catching the big move.
Follow me and keep using plain language to break down the funding logic between the Fed, macro data, and the crypto market.
