FedWatch Tool Shows 17.2% Fed Rate Cut Probability

2 mins mins

Key Points:

Market anticipates possible interest rate cuts by the Federal Reserve.
CME FedWatch estimates 17.2% chance of a 25bp cut.
Potential rate adjustments could affect crypto market dynamics.

CME’s FedWatch tool reported on January 6th an 82.8% probability of no Fed rate change in January 2026, with a 17.2% chance of a 25 basis point cut.

Rate expectations influence digital asset movements, with lower rate cut probabilities impacting cryptocurrencies like Bitcoin and Ethereum, potentially affecting risk and investment behaviors in the crypto market.

FedWatch Tool Signals Potential Rate Shift

Federal Reserve’s upcoming policy decision is drawing attention with the CME Group’s FedWatch Tool, showing a 17.2% chance of a 25bp cut in January. Current probabilities indicate economic strategies could alter market trends.

The potential rate cut highlights volatility concerns and shifting economic policies. Expectations for adjustments are impacting asset valuations and market strategies. Rates remaining unchanged hold an 82.8% probability.

Cryptocurrency markets, including BTC and ETH, are under scrutiny as investors digest potential Federal Reserve actions. Public discussions remain muted, yet the emphasis is on navigating uncertain futures.

Crypto Markets React to Fed Rate Projections

Did you know? In December 2025, the FOMC implemented a 25bps rate cut; similar actions often boost short-term crypto rallies.

According to KuCoin, Bitcoin (BTC) currently trades at $93,911.06, reflecting a market cap of formatNumber(1875595819632, 2) with a dominance of 58.38%. Trading volume within the day is significant at formatNumber(53447224058, 2), signaling dramatic intraday movements.

bitcoin-daily-chart-5446 — Bitcoin(BTC), daily chart, screenshot on CoinMarketCap at 23:48 UTC on January 5, 2026. *Source: CoinMarketCap*

The Coincu research team suggests the FedWatch data adds nuance to rate expectations, offering potential bullish impacts on digital assets if rate cuts materialize. However, these sentiments are restrained without conclusive directional outlooks.

“While the probability for a rate cut is currently at 17.2%, the crypto markets remain sensitive to policy shifts, which could dictate future trends.” — Arthur Hayes, Co-founder, BitMEX: BlockBeats

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.