Federal Reserve Rate Cut Expectations Disappear, Bitcoin and Crypto Market Bullish Logic Falters

Gate News, March 23 — The CME FedWatch Tool shows that the probability of the Federal Reserve cutting interest rates at the April 29 meeting has dropped to zero, while the chance of a rate hike has increased to 12.4%, marking a rapid reassessment of market interest rate expectations. This shift directly impacts Bitcoin and the broader cryptocurrency market, undermining the previous price rally logic based on expectations of rate cuts.

Earlier, Bitcoin’s price surged from $64,000 to $76,000 in early March amid expectations of rate cuts. However, as the likelihood of a cut diminishes, investors’ optimism about risk assets driven by low interest rates has waned, causing Bitcoin to retreat to $68,739. Analyst Ash Crypto pointed out that the surge in crude oil prices triggered by the war has further increased the probability of rate hikes, shifting market momentum toward the sellers.

Since the outbreak of the US-Iran conflict at the end of February, Brent crude oil prices have risen about 50%, reaching $112 per barrel, with the Strait of Hormuz nearly blocked. Inflation expectations have risen to 5.2%, well above the Fed’s 2% target, increasing the likelihood of rate hikes, which directly weakens the rationale for institutional investors to flow into cryptocurrencies like Bitcoin and Ethereum.

Analyst DefiWimar warned that the swap market is currently pricing in over a 50% chance of rate hikes before the end of the year, suggesting that bullish sentiment in the crypto market may be underestimated. Meanwhile, trader MarketSync_ pointed out that most futures contracts still expect rates to remain unchanged at the next meeting, indicating that short-term volatility may be more driven by market sentiment than policy itself.

Overall, if oil prices remain high and the Strait of Hormuz remains blocked, the probability of a Fed rate hike could continue to rise. Each increase in this probability weakens the momentum of institutional capital entering Bitcoin and other risk assets, and short-term pressure on the crypto market should not be overlooked.