Daily Market Update: Crypto and Stock Markets Rally on December Rate Cut Expectations

TLDR

• Bitcoin recovered to $88,100 on Tuesday after falling toward $82,000 last week as Federal Reserve rate cut expectations reached over 80% for December
• The S&P 500 gained 1.6% and Nasdaq jumped 2.7% on Monday in a tech-led rally, though major indexes remain headed for monthly losses
• Ethereum rebounded to $2,945 while gold traded near $4,140 as rate cut bets lifted both crypto and traditional risk assets
• QCP Capital reports funding rates turned negative across perpetual futures venues as long leverage cleared out, lowering liquidation risks
• Fed officials John Williams and Chris Waller signaled potential near-term cuts, driving the shift in market expectations

Bitcoin stabilized around $88,100 in Tuesday trading after a volatile stretch that saw prices test $82,000 last week. The recovery came as traders sharply increased their bets on a December Federal Reserve rate cut.

Markets now assign over 80% probability to a quarter-point rate cut next month. This shift in expectations helped both crypto and stock markets recover from recent weakness.

The change in rate outlook followed statements from Federal Reserve officials last week. New York Fed President John Williams said cuts could come in the “near term.” Fed Governor Chris Waller reinforced that view on Monday.

Polymarket betting odds swung decisively toward a December rate cut over the weekend. This prediction market shift aligned with the broader change in trader positioning across financial markets.

Stock Markets Rally as Tech Rebounds

The S&P 500 jumped 1.6% on Monday while the Nasdaq Composite surged 2.7%. The rally marked the biggest gain for tech stocks since May as megacap names snapped back from recent losses.

Stock futures edged down 0.1% on Tuesday morning as traders consolidated Monday’s gains. Futures linked to the Dow Jones Industrial Average and Nasdaq 100 both ticked slightly lower.

Despite Monday’s strong session, major indexes remain on track for monthly losses. Investors continue reassessing valuations in AI and growth stocks after their extended rally.

Ethereum traded around $2,945 on Tuesday after recovering from last week’s pullback. The second-largest cryptocurrency tracked Bitcoin’s recovery as risk sentiment improved across markets.

Gold traded near $4,140 in early Asia hours. The precious metal lifted as rate cut expectations rose and traders positioned ahead of U.S. economic data.

Crypto Market Shows Signs of Stabilization

QCP Capital noted that funding rates have turned negative across major perpetual futures venues. This indicates long leverage has been cleared from the system. The desk said this lowers the chance of another forced liquidation cascade.

Year-end call option open interest outweighs puts at key strikes including $85,000, $120,000, and $140,000. Traders are hedging in both directions with downside protection still in place.

Glassnode data points to a structural reset in the market. The firm sees oversold momentum and rising short-term holder supply, conditions it associates with late-stage corrections.

The Cumulative Volume Delta for perpetual futures remains negative. This indicates recent selling pressure has come from aggressive sellers in futures markets rather than spot selling.

Glassnode characterizes the recent move as a controlled drawdown driven by position unwinds. The firm says signs point to stabilization within the current trading range rather than disorderly liquidation.

Economic data releases resume this week after delays. Tuesday brings September updates on producer prices and retail sales plus a November consumer confidence reading.

U.S. markets will close Thursday for Thanksgiving and operate on a reduced schedule Friday. Trading will shut at 1 p.m. ET on Friday.

The post Daily Market Update: Crypto and Stock Markets Rally on December Rate Cut Expectations appeared first on CoinCentral.