Bitcoin has become Wall Street's purest rate trade. Hot inflation just sent it to a three-month low.
Future Times4 min read
In 30 seconds
October's 0.4% rise in consumer prices and Christopher Waller's talk of a half-point hike have made a December Fed rise look near-certain. Traders now see bitcoin touching $70,000 before the year is out as the likelier path.
- Traders give bitcoin a 67.5% chance of touching $70,000 this year, up 23 points in a week
- A December Fed hike is priced at 85.5%, and a January follow-up has become close to a coin flip
- Ether is $60 above $2,000, and traders see a 79.5% chance it breaks below that level in November
What it means
- MarketsCrypto is now trading as a leveraged read on the Fed's rate path.
- Stocks and sectorsCompanies whose value rests on crypto prices are the most exposed: listed bitcoin holders such as Strategy, exchanges…
- PolicyWaller's speech shows that at least one influential governor is prepared to argue for a half-point move.
What to watch
- 13 NovProducer prices on 13 November, minutes of the Fed's October meeting on 18 November and October PCE…
- 18 NovProducer prices on 13 November, minutes of the Fed's October meeting on 18 November and October PCE…
- 25 NovProducer prices on 13 November, minutes of the Fed's October meeting on 18 November and October PCE…
- 9 DecProducer prices on 13 November, minutes of the Fed's October meeting on 18 November and October PCE…
The odds
Polymarket · finalBitcoin falls to $70,000 before the end of 2026
Resolved yes68% when this was published
Signals to watch
- A bitcoin close below $70,000, or ether below $2,000, would confirm what traders already expect.
- A drop in the January hike odds back below a third would be the first sign that the rate shock is passing.
- What price will Bitcoin hit in 2026: ↓ 65,000100%Resolved yes
- What price will Bitcoin hit in November: ↓ 72,500100%Resolved yes
- What price will Bitcoin hit in 2026: ↑ 90,0008%down 15 points
Bitcoin changed hands at about $73,700 early on Wednesday 11 November, around $32,000 below its level a year ago and more than $13,000 under its early-October peak above $87,000. On Tuesday it touched $72,787, its lowest since August, after the Labor Department reported that consumer prices rose 0.4% in October, against forecasts of 0.3%. Ether, at about $2,060, has fallen harder.
The trigger was not a crypto scandal or a hack. It was the Federal Reserve. Within hours of the inflation report, the market had moved from asking whether the Fed would raise rates in December to how far, and whether January would bring another rise. Crypto, which pays no interest, has taken that repricing harder than almost anything else.
Traders now give bitcoin a 67.5% chance of touching $70,000 before the end of 2026 (as of 11 November), up 23 points in a week. The odds of a drop to $65,000 have climbed 11 points to 36.5%. Rate expectations and crypto prices are moving together, and traders expect the slide to run further while the Fed tightens.
A threshold Waller set, and the data cleared
The inflation numbers mattered because of a speech delivered hours earlier. Speaking in London on 10 November, Fed governor Christopher Waller said he was "leaning toward supporting an increase in our policy rate of 25 basis points" in December. He then set a condition: if October's core inflation came in "around 0.3 percent or even higher", he believed "a 50 basis point hike in the policy rate should be considered".
Core prices, which exclude food and energy, rose exactly 0.3%, the third month in a row at that pace. Because the Bureau of Labor Statistics did not collect price data in October 2025, during a lapse in federal funding, it published no annual rates, so markets have only the monthly figures to judge. They read them as Waller had told them to.
Waller went further than the December meeting. "Hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take," he said, adding that further tightening "will be needed, sooner rather than later". That is the language of a hiking cycle.
The rate path traders are now pricing
Rate markets took him at his word. Traders put the chance of a quarter-point rise at the Fed's 9 December meeting at 85.5%, and of a half-point or larger move at 10.8%, up from 1.4% a week ago.
The bigger shift is further out. Traders now give a quarter-point rise in January a 47.5% chance, up 30 points in a single day. A week ago traders put it at 24.5%. Now the market sees roughly even odds that December is the first of at least two rises.
That second hike matters most for crypto. A series of rises lifts the return on cash and Treasuries month after month; two- to five-year Treasury yields rose at least 10 basis points on Tuesday. Bitcoin, with no yield of its own, has to compete with that.
Ether is closer to the edge
The crypto markets show the same pattern. Traders put the chance of bitcoin trading below $72,500 at some point in November at 83.5%, up 42 points in a week. The chance of bitcoin reaching $90,000 this year has halved in a week to 16.5%.
Ether is weaker. At about $2,060 it is barely 3% above $2,000, and traders give it a 79.5% chance of falling below that level before the end of November, up from 26.5% a week ago.
The money is leaving through the most visible door. US spot bitcoin exchange-traded funds lost a net $1.48bn in the first six trading sessions of November, with only one day of inflows, according to fund-flow data. On Monday alone the funds lost a net $201mn, with $213mn pulled from BlackRock's iShares Bitcoin Trust. US spot ether funds lost another $185mn the same day. Investors who bought crypto through those funds as a growth asset appear to be treating it as a rate-sensitive one.
Why the slide could stall
The case against the market is that the Fed is not of one mind. Michelle Bowman, the vice-chair for supervision, also spoke on 10 November and struck a more cautious note. "The benefit of additional policy tightening has to be carefully weighed against its costs," she said, adding that policy "is not on a preset course".
If producer prices on 13 November or the October PCE report on 25 November come in softer, the January hike could fade as fast as it arrived, and crypto would likely recover with it. Oil, which fell on Tuesday to its lowest since late August, helps the doves. But each week of fund outflows leaves fewer buyers waiting to catch a rebound.
What it means for markets and companies
Markets Crypto is now trading as a leveraged read on the Fed's rate path. Until the January meeting is priced one way or the other, each inflation release is likely to move bitcoin more than equities.
Stocks and sectors Companies whose value rests on crypto prices are the most exposed: listed bitcoin holders such as Strategy, exchanges such as Coinbase whose trading revenue falls with prices, and the fund managers losing assets as ETF holders leave.
IBITCOINMSTRPolicy Waller's speech shows that at least one influential governor is prepared to argue for a half-point move. The December statement and projections will show whether he has company.
What to watch
Producer prices on 13 November, minutes of the Fed's October meeting on 18 November and October PCE inflation on 25 November come before the 9 December decision. A bitcoin close below $70,000, or ether below $2,000, would confirm what traders already expect. A drop in the January hike odds back below a third would be the first sign that the rate shock is passing.
For now, bitcoin's price is being set at the Fed, not on the blockchain.