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Bitcoin (BTC) is falling sharply as expectations for interest rate cuts by the U.S. Federal Reserve (Fed) have faded and the possibility of additional hikes has instead emerged. The shift reflects the interest rate futures market beginning to price in further tightening amid concerns that inflation may remain entrenched.

According to the digital asset industry and CME FedWatch on March 26 (local time), the market is no longer pricing in the possibility of rate cuts this year. Instead, futures prices now reflect the probability of roughly 15 basis points of rate hikes by year-end. Some observers are even raising the possibility that additional hikes could continue into next year. The market scenario that had initially expected rate cuts within the year has effectively been completely reversed.

As fears of tighter policy spread, Bitcoin fell toward the $68,000 level. In Binance's Tether (USDT) market earlier in the day, Bitcoin at one point dropped to $68,153. It is currently trading near $68,830, down 3.5% from the previous day. The disappearance of expectations for a Fed pivot appears to have sharply weakened investor appetite for risk assets.

Forced liquidations also followed amid the sharp price swings. Over the past 24 hours, positions worth a total of $330 million were liquidated across the Bitcoin network. Of that, long positions, or bets on gains, accounted for $290 million, representing 88% of the total, indicating that the impact of the price decline was concentrated in long positions. Liquidations of short positions, or bets on declines, were limited to about $40.08 million. 123123