FedWatch Data Shows Reduced Rate Cut Expectations for 2026

The Federal Reserve’s probability of a 25 basis point interest rate cut in January 2026 is at 19.9%, according to current CME FedWatch data, down from last week’s 31%.

This updated probability affects market expectations, influencing cryptocurrencies like BTC and ETH, as lower rate cut odds could pressure risky assets and alter investor strategies.

Historical Impact of Fed Decisions on Bitcoin Prices

CME FedWatch’s latest report shows a significant decline in the probability of a 25 basis point rate cut by the Federal Reserve from 31% last week to 19.9% for January 28, 2026. The percentage for keeping rates unchanged has climbed to 80.1%, highlighting investors’ heightened stance on the Fed’s monetary policy.

With these metrics, market conditions could reflect increasing pressure on risk assets, including cryptocurrencies, as a result of this recalibration. The expectation shift is also notable for its potential impact on BTC and ETH as they adjust to changing liquidity perceptions.

“Our focus remains on achieving maximum employment and stable prices, and we will adjust our policy as needed.” — Jay Powell, Chair, Federal Reserve, via CME FedWatch

Market Data Overview

Did you know? Past Federal Reserve pauses have historically led to significant reductions in Bitcoin prices, with notable decreases from 10% to 20%, illustrating the cryptocurrency’s sensitivity to federal monetary policy changes.

Bitcoin (BTC) is currently valued at $89,750.27 according to CoinMarketCap, with a market capitalization of $1.79 trillion, representing 59.16% market dominance. A 1.26% price increase occurred in the last 24 hours, contrasting with a 20.43% drop over the past 90 days, behind its 67.89% spike in 24-hour trading volume.

Insights from the Coincu research team suggest that the reduction in rate cut expectations adds to existing pressures on DeFi tokens and altcoins reliant on liquidity. Federal Reserve stability may continue to influence such assets significantly, shaping future financial landscapes.