Probability of Fed rate cut in December exceeds 70%: Will Bitcoin reverse?

CME FedWatch is currently reflecting a probability of more than 70% that the US Federal Reserve (Fed) will cut rates by 25 basis points at the meeting on 12/9-10, lowering the target rate range from 3.75%-4.00% to 3.50%-3.75%.

This is a sharp reversal compared to November 21, when New York Fed President John Williams stated the central bank could still lower rates “in the near term” without jeopardizing the 2% inflation target. Just days before, this probability was only about 30%, affected by unclear government data and hawkish Fed remarks.

The current question is whether a December rate cut is enough to pull Bitcoin out of its defensive state, or if macro factors will arrive too late for a market under leverage pressure and ETF outflows.

From November 20-21, Bitcoin’s price dropped from $91,554 to $80,600, before recovering slightly to $84,800. This development has investors worried that BTC may have already reached a local peak at $126,000 and that bullish momentum is running out.

Why Rate Cuts Matter for Bitcoin

Rate cuts directly impact real yields and liquidity. Over the past two months, Treasury yields have adjusted upward as the market priced out easing, pulling capital from high-risk assets and tightening global liquidity.

If the Fed cuts rates as expected and easing signals continue, real yields will decline and liquidity will expand—historically correlating with positive Bitcoin performance. However, on-chain data from Glassnode and derivatives positioning indicate the market has not truly reversed. Investors are recently in the red, ETFs continue to see outflows, and options traders are paying up for downside protection.

Rapid Developments

Williams’ remarks had a strong market impact, just lowering the probability of a December rate cut to 30% due to unclear jobs data. When he emphasized the possibility of cutting rates without affecting inflation control, traders immediately increased bets on a rate cut. By November 21, the probability of a Fed rate cut had surpassed 70%, reversing the downtrend of previous weeks.

This sensitivity reflects the market’s extreme focus on Fed signals after two rate cuts in 2025, most recently on October 29, which brought the funds rate to 3.75%-4.00% and announced the end of quantitative easing from December 1.

Real Yields, Liquidity, and Bitcoin

The relationship between Bitcoin and real yields has become a key macro theme this fall. Inflation-adjusted Treasury yields rising have caused capital to flow out of non-yielding assets like Bitcoin.

S&P Global data shows Bitcoin has a negative correlation with real yields, especially since 2017, with strong price gains during easing and expanding liquidity. Bitwise research combined with global M2 money supply also indicates Bitcoin tends to rally strongly during easy Fed policy and rising money supply.

If the Fed cuts rates in December and easing signals persist, real yields will be capped, liquidity will recover, and conditions will favor Bitcoin price increases. Conversely, if there is only a single cut followed by hawkishness, real yields remain high, liquidity limited, and Bitcoin will struggle to reverse.

What Glassnode Sees On-Chain and in Derivatives

Glassnode’s November 19 report reflects the strong impact of the recent price drop and why investors’ positioning remains defensive.

Bitcoin broke below the short-term holder cost basis and the -1 standard deviation band, falling under $97,000 and temporarily touching $89,000, before nearly losing the $80,000 level on November 21.

*GiBitcoin trading below short-term holder cost basis and cooling price bands, indicating recent buyers are struggling amid the current price drop.*Bitcoin price trading below short-term holder cost basis and cooling bands, showing recent buyers are underwater in the current market.

This has left nearly all new investor cohorts with unrealized losses, turning the $95,000–$97,000 area into resistance.

Glassnode estimates there are now 6.3 million BTC at a loss, mainly in the -10% to -23.6% range—distribution similar to the sideways bear market of 2022, rather than a full capitulation.

Two notable price levels: Active Investors’ Realized Price ( is around $88,600, representing the average cost of frequently traded coins.

The True Market Mean, near $82,000, marks the boundary between mild corrections and deeper 2022-style drawdowns. Bitcoin is now trading within this range.

![])https://img-cdn.gateio.im/webp-social/moments-d36c23cdd6f23ea4943839665de94899.webp(*KhoAbout 6.3 million BTC are currently at an unrealized loss, concentrated between -10% and -23.6% as of November 2025.*Off-exchange flows reinforce caution. US spot ETFs maintain a negative 7-day average, with outflows near $3 billion in November.

This indicates institutional investors are not “buying the dip.” Open interest in derivatives has dropped alongside price, reflecting traders reducing risk rather than adding leverage.

Options positioning shows clear defensive sentiment. Implied volatility has bounced to levels seen during October’s liquidations, skew is heavily negative, and one-week puts are trading at double-digit premiums to calls.

Net flows show traders are paying extra for $90,000 puts while only lightly buying calls. Glassnode notes dealers are short delta and hedging by selling futures, creating mechanical pressure as the market weakens.

The Road Ahead Depends on the Fed

A December rate cut accompanied by guidance for further easing would cap real yields and restore liquidity—something Bitwise and S&P Global note has historically benefited Bitcoin.

The current 70% probability reflected by FedWatch signals growing confidence that the Fed can ease without triggering inflation—exactly what Bitcoin needs to reverse the market.

However, Glassnode’s on-chain and derivatives data show the immediate situation remains fragile. Recent buyers are underwater, ETFs are seeing outflows, leverage is dropping, and options positioning favors protection over conviction.

This means even a December rate cut may not trigger an immediate reversal unless accompanied by clear guidance on next steps.

If the Fed only cuts once and emphasizes inflation risks, macro momentum may be too weak to change ETF flows or risk appetite. Bitcoin could remain capped below the $95,000–$97,000 resistance that Glassnode now sees as structural.

Williams’ comments open the possibility: a December rate cut with forward guidance could open the door for Bitcoin. Whether that’s enough to break resistance depends on whether the Fed treats December as the start of a new easing cycle or just a short-term adjustment.

The market is currently pricing in the first scenario at 70%. On-chain data shows traders have yet to truly believe.

Han Tin