Bitcoin News Today: Fed's Inflation Caution vs. Labor Market Push Drives Rate Cut Uncertainty

The probability of a 25 basis points interest rate cut by the Federal Reserve in December 2025 has plummeted to 30%, according to the CME FedWatch tool, marking a sharp reversal from the 98% odds seen a month earlier. This dramatic shift reflects deepening divisions among policymakers and mounting concerns over inflation and labor market data gaps caused by a record 43-day government shutdown according to business insider. While Fed Governor Christopher Waller has consistently advocated for a cut to support a weakening labor market, other officials, including Vice Chair Philip Jefferson, have urged caution, emphasizing the need to "proceed slowly" as the central bank approaches a neutral policy stance according to Reuters.

The Fed's internal debate is playing out against a backdrop of conflicting signals. On one hand, Waller and others argue that restrictive monetary policy is exacerbating economic strain, particularly for lower- and middle-income consumers according to Reuters. On the other, inflation risks remain a focal point. Although price data has shown modest easing, the Consumer Price Index (CPI) still indicates that 55% of items are rising faster than 3%, above the Fed's 2% target according to Reuters. This has led to a sharp decline in market confidence, with the odds of a December cut now teetering near a 50-50 split according to business insider.

The data blackout has further muddied the outlook. The Labor Department's delayed release of the September jobs report and uncertainty over future data publication schedules have left policymakers with incomplete information. This has fueled skepticism about the labor market's resilience, with Fed speakers like Boston President Susan Collins setting a "high bar" for additional easing according to Reuters. Meanwhile, private-sector data and the Fed's own surveys suggest a mixed picture: while hiring has slowed, wage growth remains constrained according to Reuters.

Market participants are closely monitoring the implications for asset classes. In crypto markets, Bitcoin (BTC) and Ethereum (ETH) traders are recalibrating strategies amid shifting rate expectations. Historically, rate cuts have buoyed BTC prices, but with no-cut odds now at 53% on Polymarket according to blockchain news, BTC has tested support levels near $90,000 according to blockchain news. Ethereum faces similar pressures, with DeFi protocols potentially attracting capital if traditional borrowing costs remain high according to blockchain news. However, a no-cut scenario could reverse recent inflows into Bitcoin ETFs and amplify volatility in altcoins like Solana (SOL) and Ripple (XRP) according to blockchain news.

Equity markets are also bracing for volatility. A December rate cut is increasingly seen as a toss-up, with S&P 500 indices potentially facing downward pressure if growth stocks, which are sensitive to interest rates, come under strain according to blockchain news. Sectors like technology and consumer discretionary could underperform, while defensive plays in utilities and healthcare may gain traction according to blockchain news. Cross-asset correlations, such as the 0.7 link between the Dow Jones and BTC, suggest that a stock market pullback could amplify crypto declines according to blockchain news.

As the December 9-10 FOMC meeting approaches, the Fed's final decision will hinge on a delicate balancing act between inflation risks and labor market fragility. With officials like Waller pushing for a 25-basis-point cut and others advocating for patience, the central bank's minutes and real-time economic data will be critical in shaping market expectations according to business insider. For now, the path forward remains uncertain, underscoring the importance of diversification and risk management for investors navigating this pivotal moment in monetary policy.