Expectations of Fed rate cuts have pushed up Bitcoin prices significantly, with traders betting on a 97% chance of a rate cut tomorrow morning

On the eve of the announcement of the results of the Federal Reserve's interest rate meeting in December, the price of Bitcoin ushered in a significant increase, reaching an intraday high of $94,600 yesterday and an increase of 2.6% in the past 24 hours. For this round of rally, the market generally believes that its core driving force is the expectation of interest rate cuts that have been basically digested.

The core driving force is extremely high market expectations. At press time, data from prediction market Polymarket showed that traders are betting on a 97% probability of a 25 basis point rate cut by the Federal Reserve at its interest rate meeting in the early hours of tomorrow morning.

This strong consensus has prompted some funds to deploy risk assets such as Bitcoin in advance, which are considered sensitive to interest rates, in anticipation of liquidity benefits from loose monetary policy.

Violent price fluctuations have also triggered large-scale leverage liquidations. Data shows that in the past 24 hours, the total liquidation of the entire network was $431 million, of which $309 million came from short traders, which further accelerated and amplified the upward momentum of prices.

To sum up, the core reason for Bitcoin's rise is that before the arrival of key macro events, the drive of high-certainty expected interest rate cuts and the liquidation effect of short leverage have formed a self-strengthening market.

However, the real test lies in whether the market's reaction will be a "good news" pullback or continue to rise based on new expectations for the future interest rate path after the interest rate decision is announced in the early morning.

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