CME Federal Reserve observation data shows that the probability of maintaining the interest rate unchanged in January 2026 is 47.1%, the probability of a 25BP rate cut is 19.9%, and the probability of a 50BP rate cut is only 8.2%. This combination of "high interest rate dominance and weak rate cut expectations" has a core impact on cryptocurrencies concentrated in three dimensions: liquidity, risk appetite, and market volatility:
- In terms of liquidity, the mainstream expectation of maintaining the interest rate unchanged (47.1%) has dashed easing expectations, and the opportunity cost of holding yield-free crypto assets like BTC and ETH remains high. Funds are more inclined to flow into U.S. Treasury bonds and other fixed-income products, resulting in overall tighter liquidity in the crypto market, making it difficult to obtain sustained funding support.
- In terms of risk appetite, the extremely low probability of rate cuts (25BP only 19.9%, 50BP 8.2%) directly suppresses market risk sentiment, making it difficult for the U.S. dollar to weaken significantly. Cryptocurrency valuations lack external support and are vulnerable to hawkish statements from Federal Reserve officials and inflation rebounds, which can lead to short-term corrections.
- Regarding market volatility, there are significant discrepancies in policy expectations. Cryptocurrency trends are closely tied to economic data such as inflation and employment, and can experience drastic fluctuations before and after data releases. Among them, ETH is more sensitive to policy changes than BTC, and high-beta altcoins will demonstrate more pronounced volatility.
- In terms of institutional behavior, due to the extremely low probability of significant easing (50BP rate cut), institutions are becoming more cautious in their strategies, often participating in short-term trading with smaller positions and lacking motivation for long-term allocations, further limiting the market's upside potential.
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