Binance Research identifies a potential floor for Bitcoin as global tightening momentum slows, despite rising odds of a December Fed rate hike to 96.3% following Governor Waller's recent comments.
Fed Governor Waller said Tuesday he leans toward a quarter-point December hike and would consider a half-point move if core inflation stays elevated, and CME FedWatch odds of a 25bp hike rose from 76.3% to 96.3% on Tuesday. Firming hike expectations are typically supportive for the dollar in the coming days.
Binance Research argues BTC historically bottomed and rallied (160%+ six-month return by March 2024) before central banks began cutting, as the pace of tightening slowed since its July peak. Near-term headwinds remain: December 25bp hike odds jumped from 76.3% to 96.3% after Waller's speech, and BTC trades at $74,131, 41% below its $126,198 high after a 3.5% weekly drop.
Binance Research suggests Bitcoin could benefit from a slowdown in global monetary tightening, even as markets price in a December Federal Reserve rate hike. While eight of 10 tracked central banks have raised rates in the last six months, tightening momentum has eased since its July peak. Bitcoin currently trades at $74,131, down 3.5% over the past week and 41% below its $126,198 all-time high.
Odds of a 25-basis-point hike in December rose from 76.3% to 96.3% on Tuesday, according to CME Group's FedWatch Tool.
Binance Research found Bitcoin moved with the direction of global policy, not its level: in past cycles it bottomed and posted its strongest six-month returns while rates were still rising but the pace of hikes was slowing, before any cuts started.
Markets now put the odds of a 25-basis-point December hike at 96.3% after Fed Governor Waller's speech, which is a near-term headwind; Bitcoin already fell 3.5% this week and trades 41% below its all-time high.