Markets Price In Triple Rate Cut for 2025 – What It Means for Bitcoin

Odds of us seeing three consecutive interest rate cuts in 2025 have hit an all-time high on prediction platform Polymarket. Traders on the platform are now pricing an 87% likelihood that the Federal Reserve will slash rates at every single FOMC meeting still remaining this year. 

It took us a long time to get to this optimism regarding interest rate cuts. For most of the year, the Fed appeared extremely hesitant to slash rates. Worries about inflationary spikes due to tariffs certainly come into play, as at the time, no one really knew how the American economy would react to a combination of elevated import costs, geopolitical uncertainty, and a still-fragile post-pandemic recovery.

The next interest rate decision is only a day away. On Wednesday, the Federal Open Market Committee is expected to slash another 0.25% off the interest rate, bringing the total cuts this year to 0.50%, and lowering the overall target to 3.75—4.00%.

Following this week's interest rate decision, the Fed will meet once again on December 10, and markets are already anticipating further monetary easing by the Federal Reserve. 

On top of the Polymarket prediction, the CME FedWatch tool is also forecasting a 92% chance that we reach an interest rate of 3.50% by the end of the year. 

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What These Rate Cuts Mean For Crypto

Unlike most instances when a central bank lowers borrowing costs to tame inflation, this time around, it wasn’t cooling inflation that drove the Fed toward the monetary easing path. Instead, repeated signs that the labor market was cooling, including several underperforming NFP data points, signaled that economic momentum was fading faster than expected.

Lower rates have a direct correlation to investors’ behavior. As borrowing costs get cheaper, the demand for yields like government bonds becomes less attractive, turning investors to seek more risks and more potential rewards in markets like crypto and stocks. 

Access to money also becomes cheaper, which generally reflects in an increase in market liquidity for riskier investments. 

Bitcoin and other digital currencies tend to benefit from monetary easing. The liquidity pump, paired with a weaker interest in government debt and a fiat currency losing its power, makes more volatile investments like crypto far more attractive.

However, given that inflation remains slightly increasing, the Fed’s ability to continue cutting rates and get us closer to pre-COVID levels may be limited in 2026. Moreover, sudden inflationary spikes next year could turn this potential bull cycle more volatile than it needs to be, meaning that investors should keep an even closer eye on incoming inflation data.

Analysts from Morgan Stanley believe that the dollar will continue to lose strength in 2026, while Standard Chartered anticipates Bitcoin reaching $135K by the end of the year. Both analyses coincide in the matter that monetary easing and geopolitical uncertainty will likely drive investors toward alternative assets.