Fed plays it cool: Inflation down, rate cuts on the horizon

The Federal Reserve’s November minutes have revealed cautious optimism among investors. Inflation is easing, and the labor market seems to be holding strong which has set up a stage for gradual rate cuts. The Federal Open Market Committee (FOMC) has reportedly lowered rates by 25 bps to 4.5%-4.75% in November with an aim for a neutral policy stance.

The global crypto market recorded a mild correction in the last 48 hours as Bitcoin (BTC) price dropped below the $93,000 mark straight from missing a chance to hit $100k. The cumulative crypto market cap declined by more than 2% in the last 24 hours to stand at $3.19 trillion.

Trump’s next move in focus

According to reports, inflation remains above the Fed’s 2% target but officials have seen progress, while rent costs and restrictive policies are expected to keep inflation on a downward path. The labor market data has shown some resilience. Despite October’s weak payroll data due to storms and strikes in the US, layoffs remained low.

Uncertainty is hovering around the neutral rate now where policy neither boosts nor restrains growth. However, there are certain slow adjustments are being planned out to avoid oversteering. The market confidence in a December cut still remains mixed but lower than 60% probability. It comes with concerns that President-elect Trump’s tariffs and deregulation could fuel inflation.

It added that the crucial meeting didn’t mention the US presidential elections in the minutes, nor was there a staff notation of the stock market volatility increased before November 5. It didn’t carry any talks over the fiscal policy implications

The officials had agreed that inflation is all controlled and the chances of an unexpected surge in unemployment are quite low. There are still some participants who mark that the Committee could halt easing the policy rate. This can be done if inflation remains too high ahead.

Over $11B Bitcoin options set to expire

Bitcoin’s failure to hit $100,000 after a massive bullish rally had sparked fears of a downward move among the investors. After hitting the all time around of $99,800 on November 22, the BTC price dropped by over 8% to the $91k level. Despite a 120% surge this year, a heavy shift in options activity can be seen in the market.

$11.8 billion in options are set to expire on December 27 and crypto traders are preparing for a potential major move from here. This implies that Bitcoin could fall to $81,493 or soar to $115,579 and it holds a 68% probability of such a price move. BTC is trading at an average price of $93,149 at press time. Its 24-hour trading volume is up by $91.7 billion.

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