Bitcoin Slides as Fed Rate-Cut Bets Vanish and Odds of More Hikes Rise

Bloomingbit Newsroom

Summary

Bitcoin (BTC) is tumbling as expectations for Fed rate cuts have disappeared and the possibility of additional rate hikes has emerged.
Markets are no longer pricing in rate cuts this year and are instead reflecting roughly 15 basis points of rate hikes by year-end, with some also seeing additional hikes extending into next year.
As tightening fears spread, Bitcoin fell to the $68,000 range, down 3.5%% from a day earlier, while $330 million in liquidations over the past 24 hours were concentrated in long positions.

Forecast Trend Report by Period

Bitcoin tumbled as expectations for Federal Reserve rate cuts disappeared and markets began pricing in the possibility of another increase. Sticky inflation concerns have pushed interest-rate futures to reflect further tightening.

As of June 26, data from CME FedWatch showed markets were no longer pricing in any rate cuts this year. Instead, futures implied about 15 basis points of additional tightening by year-end. Some market participants also see the possibility of further rate increases extending into next year. That marks a complete reversal from earlier expectations for cuts in 2024.

As fears of tighter policy spread, Bitcoin fell toward the $68,000 level. On Binance's Tether market, it briefly dropped to $68,153 earlier in the day. It was trading near $68,830, down 3.5% from a day earlier. The fading prospect of a Fed pivot has sharply weakened appetite for risk assets.

The sharp move also triggered a wave of forced liquidations. Across the Bitcoin market, about $330 million of positions were liquidated over the past 24 hours. Long positions accounted for $290 million, or 88% of the total, showing the damage from the selloff was concentrated in bullish bets. Short liquidations totaled about $40.08 million.