Bitcoin is consolidating below $95,000 ahead of the Fed rate decision scheduled for December 10.
Although the probability of another cut increased by 25 basis points to almost 90%, the market was unsure whether it would be an aggressive or mild cut.
Source: CME Fed Watch Tool
The chance of an interest rate cut has risen by 3% in the past week and by more than 20% in the past month.
As expectations of interest rate cuts improved, Bitcoin rose [BTC] The correction has eased above USD 80,000 and is consolidating between USD 85,000 and USD 95,000.
Macro Uncertainty vs BTC Betting
Last week, fears that the Bank of Japan would raise rates and trigger another yen carry dragged BTC lower. While the risk was still present, crypto options analytics firm Amberdata said said,
“The current volatility environment does not appear nearly as sensitive to the BOJ’s interest rate regime.”
The company added:
“BTC held the support well and created a nice “base” for us to trade from for the EOY December expiry environment.”
According to Amberdata, the chances of an end-of-year rally (EOY) were likely, but the immediate upside target was $100,000.
Yet speculative interest in BTC has declined by 75% and financing rates have also fallen. indicates according to a Glassnode analyst, there is low long-term conviction.
Source: Glassnode
This further reinforced caution about the Fed’s interest rate decision, despite the increased likelihood of a 25 basis point cut. The tone of Fed Chairman Jerome Powell’s media briefing will determine how markets react.
Assessing the probability of BTC reaching $100,000
However, at the time of writing, the Top volumes are from Options showed leans heavily on the bullish side. Over the past 24 hours, most volumes have been calls (bullish bets) with $100,000 to $115,000 expected for the year-end price target.
Source: Arkham
These are often advanced players who have more experience in the market. On the retail side, however, as Polymarket shows, the chances of EOY reaching $100k was 41%, while closing at $95k was 71%.
However, for asset managers like Bitwise, the so-called ‘debasement trade’ or demand for safe havens remains an ongoing trend that will ultimately boost BTC, citing Harvard Investments.
Bitwise CIO Matt Hougan joked,
“Harvard increased its Bitcoin investment from $117 million to $443 million in the third quarter. It also increased its gold ETF allocation from $102 million to $235 million. Harvard decided to set up a depreciating trade and allocated it to Bitcoin 2-to-1 over gold.”
Final thoughts
- Expectations for Fed rate cuts have risen to nearly 90%, fueling BTC’s price recovery over the past week.
- With macro uncertainty still lingering, top players were betting on a year-end breakout to $100,000-$115,000.