First, the data. According to CME FedWatch, before the release of U.S. October CPI, markets priced in a 0% probability that the Fed would leave rates unchanged in December, a 98.9% probability of a 25-basis-point hike, and a 1.1% probability of a cumulative 50-basis-point hike. In other words, markets are already trading on a December rate hike as a foregone conclusion. 🔍

The path for next year is even more worth watching. By January, the probability of rates remaining unchanged is likewise 0%, while the probability of a cumulative 25-basis-point hike is 64.9% and that of a cumulative 50-basis-point hike is 34.8%. This shows that markets are not only pricing in a December hike, but also assigning considerable weight to the possibility that the rate-hiking cycle is not over.

Risk assets are reacting very directly.$BTC is now at 73,982.40, down 1.01% intraday, 9.6% over 30 days, and 8.1% over 7 days. The current price is close to the lower end of its 30-day range at 73,980.23; $ETH is at 2,075.81, down 2.09% intraday. The Fear and Greed Index is at 32, in the Fear zone. Prices and sentiment weakening in tandem is a typical “position cutting ahead of an event” pattern.📉

The logic is fairly straightforward: ahead of the CPI release, the probability of a rate hike has already been pushed close to 100%, meaning there is little room for expectations to shift. If inflation data comes in higher than expected, the market will be trading not on “whether rates will rise,” but on “how high and for how long.” In this environment, the risk premium on highly volatile assets tends to rise first.

Operationally, focus on three things: first, how CPI data deviates from market pricing; second, the buying support for $BTC near the lower end of its range; third, whether the Fear and Greed Index continues to fall. Let the data drive decisions; don’t try to predict the direction.

Federal Reserve rate hikes CPI macroeconomic data Bitcoin market sentiment