Myriad Moves: Markets Grow Bearish on Bitcoin and Ethereum as Rate Cut Odds Tumble
News Summary
Crypto assets, including Bitcoin and Ethereum, continue to slide as macro uncertainty sweeps through markets, with predictors on the Myriad platform turning bearish. Bitcoin has fallen over 30% from its recent all-time high of $126,000 to below $87,000, with market predictions giving an 80% chance of a further drop to $85,000. Ethereum has also not been spared, down 10% on the week and 27% on the month, trading below $3,000. Myriad predictors now favor ETH dumping to $2,500 over rising to $4,000. Despite BitMine's Tom Lee calling for an ETH supercycle, market sentiment has not followed suit. Following the Federal Reserve's 25-basis-point rate cut in October, Chairman Jerome Powell indicated that another December cut was "not a foregone conclusion." Amid data blackouts on macroeconomic reports and the government's recovery from a historic shutdown, markets are recalibrating, now largely expecting no further rate cuts in December. On Myriad, the odds for "exactly two Fed rate changes in 2025" (implying no December cut) have doubled from 31% to 62%, reflecting this shift in expectations.
Background
The current year is 2025, and Donald J. Trump is the incumbent US President. The Federal Reserve had already implemented a 25-basis-point rate cut in October. Prior to this, Bitcoin had recently established a new all-time high above $126,000, and Ethereum had also reached an all-time high of $4,946 in August. However, broader macroeconomic uncertainty, including the impact of a lengthy U.S. government shutdown on economic data releases, is reshaping market expectations for monetary policy. Market participants are closely monitoring the Fed's rate decisions for the remainder of 2025, which directly impact risk assets like cryptocurrencies.
In-Depth AI Insights
What are the deeper underlying factors driving the sudden bearish shift in the crypto market, especially after Bitcoin recently hit an all-time high? - Superficially, the sharp tumble in Fed rate cut odds disrupted market momentum. However, a deeper reason lies in a structural reassessment of market confidence in the Fed's policy independence and the economic recovery trajectory during the post-pandemic, Trump-era economy. - Despite Bitcoin's new ATH, its rally might have been driven more by short-term speculation and liquidity rather than robust macroeconomic fundamentals. Once interest rate expectations reversed, capital lacking fundamental support quickly exited. - Furthermore, the prolonged U.S. government shutdown and data blackouts amplified uncertainty, prompting investors to favor risk aversion, particularly in volatile assets like crypto, due to a lack of clear information. How might the Trump administration's economic strategies and potential influence over Fed policy shape future interest rate decisions, and consequently, impact risk assets like cryptocurrencies? - The Trump administration typically favors loose monetary policies to stimulate economic growth, potentially leading to pressure on the Federal Reserve to maintain or further cut rates. However, the Fed's independence and its considerations for inflation will be crucial counterbalances. - If the Fed withstands political pressure and maintains a hawkish stance to control inflation, the rate cut path will be slower than market expectations, continuously putting downward pressure on high-risk assets like cryptocurrencies. - Conversely, if the Fed succumbs to political pressure, it could lead to shaken confidence in the U.S. dollar, which, in the long run, might indirectly benefit decentralized cryptocurrencies as a hedge against traditional financial system risks. What do the strongly bearish short-term predictions on the Myriad market imply for broader investor sentiment and potential market reversals? - The dramatic increase in bearish sentiment on Myriad indicates fragile short-term investor confidence and a widespread expectation of further price declines. This could signal a risk of "capitulation selling" in the near term, where a large number of holders panic-sell. - However, such extreme one-sided sentiment can also create opportunities for long-term investors. Historically, when market sentiment reaches peak pessimism, it often precedes a rebound. An unexpected positive catalyst (e.g., an unanticipated Fed rate cut) could trigger a sharp short squeeze, leading to rapid price reversals. - Furthermore, the Glassnode report on Ethereum whales being more prone to selling highlights inherent structural reasons for differing performance among crypto assets during market volatility, potentially subjecting Ethereum to greater downside pressure.