Are Fed Rate Cuts Really Confirmed for Tomorrow?

Key Points

• Fed expected to cut rates by 25 bps, first reduction in ten months.
• Gold rises and dollar weakens as markets prepare for liquidity shifts.
• Liquidations surge 62% while sentiment stays cautious at neutral levels.

The Federal Reserve is widely expected to cut interest rates tomorrow, marking the first reduction in ten months. Markets anticipate a 25 basis point adjustment, which would lower the target rate from 425–450 bps to 400–425 bps.

The CME FedWatch Tool shows a 96.1% probability of this outcome, leaving only a 3.9% chance for a deeper cut. Traders, analysts, and institutions are nearly unanimous that a rate cut is already priced in.

Liquidity Shifts and Asset Market Reactions

Lower rates reduce borrowing costs, encouraging more consumption, lending, and investment across risk assets like equities and cryptocurrencies. Historically, such conditions have fueled strong rallies in digital assets, especially during periods of improving liquidity.

The macro backdrop also reflects these shifts, with gold futures rising 0.28% to $3,689.38, while the U.S. Dollar Index fell 0.66% to 96.265. These moves suggest weakening demand for the dollar and renewed interest in alternative stores of value.

Bitcoin dominance remains stable at 57.50%, with exchange balances dropping by 14.66K BTC to 2.16M. This decline signals accumulation by investors positioning for potential post-cut rallies.

Mixed Signals Highlight Cautious Market Sentiment

Despite optimism, volatility has increased, as open interest fell slightly to $220.62B while liquidations surged 62.17% to $440.34M. This activity suggests leveraged traders are being forced out as markets adjust to the expected policy shift.

The average RSI of 39.48 reflects weak momentum, pointing to lingering bearish pressure despite expectations of near-term liquidity support. Meanwhile, the Altcoin Season Index stands at 78, indicating strong activity outside Bitcoin as traders rotate capital.

Sentiment remains uncertain, with the Fear & Greed Index holding at 51, showing a balanced but cautious market outlook. While the rate cut is nearly confirmed, investors remain focused on whether further cuts in 2025 will unlock a stronger rally.

Expectations for at least three reductions next year dominate projections, aligning with cooling inflation and rising growth concerns. Markets now await confirmation of tomorrow’s decision, which could set the tone for Q4 performance across global assets.