Key Takeaways
- •Market odds for a December Fed rate cut surged to about 71% after John Williams’ dovish remarks.
- •Bitcoin quickly rebounded from $82,000 to $85,800, signaling renewed optimism among traders.
- •Other Fed officials remain cautious, warning that inflation risks could still derail easing plans.
Market sentiment improved sharply on Friday as traders began pricing in fresh odds of a U.S. interest-rate cut next month, reigniting hope that monetary easing could help risk assets stabilize.
The sudden optimism followed remarks from New York Fed President John Williams, who hinted that borrowing costs may have overshot neutral levels and suggested that a policy adjustment could arrive sooner than expected.
From Doubt to Confidence
Only a few days ago, rate-cut bets had nearly evaporated amid confusion surrounding delayed labor data and weak market confidence. But Williams’ comments reversed that trend almost instantly. According to futures data from CME FedWatch, investors now see roughly a seven-in-ten chance that the Federal Reserve will reduce rates by a quarter point at its December meeting.
The prospect of cheaper money sent traders scrambling back into risk assets — and crypto was among the first to react.
Bitcoin’s Quick Rebound
After dipping below $82,000, Bitcoin bounced to around $85,200, posting its strongest hourly recovery in nearly a week. The move marks a temporary break from the sharp correction that erased billions in open interest earlier this week.
Historically, Bitcoin’s best rallies have aligned with shifts toward looser monetary policy. Earlier this year, the asset surged to record highs immediately before the Fed implemented back-to-back cuts, fueling the idea that rate adjustments often act as catalysts for crypto momentum.
Hawks Push Back
Despite the renewed enthusiasm, the Fed remains divided. Boston Fed President Susan Collins reiterated that inflation remains stubborn and warned that policy easing could be premature. Dallas Fed’s Lorie Logan shared similar concerns, saying a pause might be wiser than risking another inflation flare-up later.
Their remarks underscore the uncertainty still surrounding the December decision — one that could tilt sentiment across global markets.
The Bigger Picture
While Friday’s relief rally offered crypto investors a moment to breathe, analysts caution that volatility remains high. Much will depend on incoming inflation data and economic reports due before the next FOMC meeting. If the data aligns with a softer stance, the market could see a renewed risk-on wave heading into the year’s end.