Bitcoin (BTC) and other cryptocurrencies are under pressure as the odds that the U.S. Federal Reserve will raise interest rates in December continue to grow.
Financial markets are currently pricing in an 80% chance that the U.S. central bank will raise its trendsetting Federal Funds Rate another 25 basis points at its Dec. 9 meeting.
The Fed last raised interest rates in September of this year, opting for a quarter point hike. It was the first interest rate increase in the U.S. since 2023.
Since then, other central banks around the world have also begun to move interest rates higher, including in Canada, Australia, and the United Kingdom.
Central banks are trying to lower inflation that has remained stubbornly above their 2% annualized targets since the end of the Covid-19 pandemic.
But higher interest rates are a negative for risk assets such as cryptocurrencies. The odds of a December hike could grow if the U.S. October inflation report comes in hotter than expected.
The prospect of rising rates is exerting downward pressure on Bitcoin, Ethereum (ETH), XRP (XRP), and other digital assets.
In early trading on Nov. 10, Bitcoin’s price is at $74,300 U.S., down about 0.50% in the past 24 hours.
Higher interest rates are just the latest headwind for cryptocurrencies, following a record $6.3 billion U.S. hack at exchange Binance and a Democratic sweep of the midterm elections.
BTC had rallied about 40% from the end of August to the end of September, rising as high as $86,000 U.S. However, the price has been pulled lower since the start of October.
Analysts see the headwinds continuing for cryptocurrencies in the near-term as uncertainty for the sector remains high heading into year’s end.
