Remarks by New York Fed President John Williams, a senior official at the US Federal Reserve, abruptly changed the market sentiment on Friday. While Williams acknowledged that inflationary progress has "temporarily stalled," he hinted that the Fed may cut interest rates in the near future. While this shift in tone has somewhat restored investors' risk appetite, the selling pressure on Bitcoin has not completely subsided.
The cryptocurrency fluctuated sharply between $83,000 and $84,000 during the day, with a 24-hour decline of 8.9%. While the BTC/USD pair showed brief recoveries, the chart reveals that the overall downward trend remains evident.
Williams' speech consisted of remarks prepared for an event at the Central Bank of Chile. The renowned economist stated that they estimate the current inflation rate to be approximately 2.75% and emphasized the need to return to the Fed's long-term target of 2% in a "sustainable" manner. However, his statement that the tariffs had a temporary impact on prices and were not expected to translate into permanent inflation drew attention in the market.
"I believe monetary policy is still relatively restrictive. Therefore, there is still room for some adjustments to the target interest rate range in the near term," Williams said, directly impacting expectations for the Fed's December meeting.
Interest Rate Change Expectations for December
Activity in derivatives markets increased following these announcements. Traders' positions expecting a December rate cut rose rapidly, pushing the probability above 70%. However, disagreements within the Fed remain evident. According to recent statements, some policymakers are not open to a rate cut until there is clearer evidence that inflation will fall to the 2% target.
Williams, however, takes a more "soft" line amid this debate. He states that the labor market is no longer as tight as it was during the pandemic, and that the rise of the unemployment rate to 4.4% is not a major alarm bell for the economy. He emphasizes the importance of achieving the Fed's primary goal of price stability while simultaneously avoiding unnecessary risks to its maximum employment target.
On the cryptocurrency side, pricing is quite fragile. Volatility in the dollar index and the search for direction in US bond yields continue to put pressure on Bitcoin. The sharp sell-off seen on the chart deepened, particularly during the Asian session. The pullback to $81,000 during the day increased volumes in the spot market and triggered liquidations in leveraged positions.
Nevertheless, some analysts say that the possibility of a "near-term" Fed rate cut could be supportive for Bitcoin in the medium term. However, the market is currently trading under the shadow of macro uncertainty and short-term selling pressure.
Under current conditions, the $82,000-$81,000 range represents short-term support for BTC, while the $85,000-$87,000 range represents the first strong resistance zone. Volatility is expected to increase further as the Fed approaches its December meeting.
