Fed cancels interest rate cut in December, chance of rate hike is 18%, Bitcoin rise slows

The Fed just cut its policy rate by 25 basis points and changed its target range from 3.75% to 4.00%. However, the outlook for another rate cut in December has now disappeared in the futures market.

Before yesterday’s FOMC meeting, many traders were expecting a third rate cut as inflation gradually eased, the labor market showed signs of softening and the Fed had already begun easing.

Although the Fed has cut interest rates this time, Chairman Powell emphasized that further rate cuts in December are “not a foregone conclusion and far from a conclusion.”

Powell said.

“There was a very different view today. And the takeaway from that is we haven’t made a decision yet for December. We’re going to look at the data we have and how that impacts the outlook and the balance of risks.”

According to CME FedWatch, after the press conference, the probability changed from a near certainty of further rate cuts to a base case of no rate change with an actual rate hike tail, and the overall interest rate path distribution for 2026 has risen and flattened.

With this adjustment, cryptocurrencies will face a more liquid background, tighter sensitivity to incoming macro data, and wider dispersion among tokens.

The January 2026 rate hike tail remains near 18.5%, according to FedWatch, reflecting persistent concerns that persistent inflation could lead the committee into a reversal if the data doesn’t settle.

Longer passes cost more. The FedWatch distribution through 2026 remained flat with an overall upward shift of about 25 basis points, with the mode outcome concentrating around 3.00% to 3.25% from mid-to-late 2026 and persisting through 2027.

Previous snapshots showed it trending towards 2.75% to 3.00% in the second half of 2026. This profile suggests a market view of fewer and more rate cuts, and that neutral real rates are higher than previously expected.

The immediate market trends for cryptocurrencies are related to liquidity and rates.

A long-term high stance supports the dollar and keeps real yields strong, but this often weighs on high beta risk and long-term narratives tied to long-ago cash flows.

Bitcoin tends to absorb that impulse with less drawdown than lowercase tokens or alt-L1s. However, broader cryptocurrency liquidity, including stablecoin float and PERP leverage, still reflects the same macro settings.

With ongoing balance sheet outflows and rising policy rates, the cost of capital within the cryptocurrency ecosystem remains subdued, and Treasury alternatives are moving some of the marginal demand away from basis-and-carry structures.

Flows become more data-dependent. Spot ETF and fund allocations are sensitive to fluctuations in the appreciation of major stock prices.

Upside inflation and strong employment data tend to increase the probability of rate hikes and pressure risks in the near term, while an apparent deflation in inflation could restart demand for duration and growth proxies.

This environment tends to result in faster rotation between BTC and alternatives as probabilities change, with increased uncertainty tilting allocators towards higher quality balance sheet and liquidity pairs.

Policy uncertainty also reshapes the volatility regime.

Wider hikes widen the distribution of crypto return outcomes, with real yields and correlations with the dollar index often rising on major macro releases.

This pattern can increase decentralization within cryptocurrencies, allowing projects backed by more accurate cash flows and fee capture to hold up better than tokens with outdated tokenomics or high emissions.

Funding markets may become cheaper as risk-free anchors rise, and attention is focused on power costs, leverage, and financial mix as miners face higher discount rates on capital expenditures and future cash flows.

Scenario mapping over the next 1-3 months centers around three paths.

In our base case, December forecasts hold at odds of close to 70% in the latest snapshot, although slowing growth and inflation have not yet softened enough to prompt another rate cut in short order. Under that setup, real yields remain strong, equity and crypto trading ranges are volatile, and Bitcoin performance is biased toward resilience and high-beta exposure.

A hawkish surprise, defined as a 25 basis point hike from a total 20-30% tail in December or January, would amplify risk-off pressures, push the dollar higher, compress valuations across long-term cryptocurrencies, and increase drawdown risk in leverage-intensive segments, while pushing capital flows into cash flow infrastructure and quality L2.

A dovish surprise of a convincing rollback in core policy could creep rate cuts back to mid-2026 pricing. The liquidity impulse will first push BTC as the cleanest macro proxy and then widen its reach as the soft landing narrative strengthens.

Portfolio construction on this tape often prioritizes liquidity management, basis calibration, and convexity.

Given its depth and clean macro beta, BTC remains the most direct means of tactically expressing changes in policy odds on CPI, PCE, and labor statistics. For alternative guidance, the higher the risk-free anchor, the more important distributed screening, emissions, and tolling around the runway becomes.

For miners, sensitivity to power prices and balance sheet leverage will be a greater driver of equity-linked tokens and revenue distribution, so they will need to weigh forward hedging costs against spot upside options.

“The rate cut has landed, but the pivot hasn’t. Traders are now leaning higher into the longer term through 2026.”

According to CME FedWatch, repricing is seen across the curve of the meeting outcome, with the December 10th meeting currently pointing to a base case of hold and a significant rate hike tail.

According to the Fed, the benchmark move delivered a rate cut, but the communication kept the easing path slow and conditional. The December meeting is currently being watched as the tail of a live uptrend, with the main probability being a hold.

FedWatch probabilities are implied from futures and updated intraday. The snapshot here reflects the table connected at the time of capture.