Bitcoin slides toward $74,000 as Fed's Waller backs December rate hike
In brief
- Bitcoin fell toward $74,000 on Tuesday as US stock futures also moved lower.
- Fed Governor Christopher Waller backed a 25 basis point hike at the December 8-9 FOMC meeting.
- Waller said 50 basis points should be considered if monthly core CPI rises 0.3% or more.
- Market-implied odds of a 25 basis point December hike stand near 97%, per Crypto Briefing.
What Waller said
Waller's case rests on inflation, which he described as elevated and spreading across the economy, according to Crypto Briefing. He backed a 25 basis point increase at the Federal Open Market Committee meeting, then went a step further. If core CPI rises 0.3% or more month over month, Waller said, a 50 basis point hike should be considered.
The timing is worth noting. The October Consumer Price Index came out the same Tuesday (and Waller indicated the print wouldn't change his view). Even an improvement from the prior month wouldn't move him off a 25 basis point hike, per the report.
His reasoning? Failing to act could undermine the Fed's credibility on inflation, Waller said.
How bitcoin traded
Bitcoin spent the day boxed into a range from the mid-$74,000s to the low-$75,000s, based on CoinGecko data as of 4:32 AM EST on November 10 that Crypto Briefing cited.
It wasn't a crypto-only move. Bitcoin and US stock futures both moved lower after Waller's remarks, and Crypto Briefing said the slide toward $74,000 tracked the broader risk-off move in equity futures.
What markets have priced in
Crypto Briefing put the market-implied probability of a 25 basis point December hike at around 97%, though it didn't name the pricing source behind that figure. On those numbers, the base case Waller laid out is close to fully expected.
The 50 basis point scenario is a different story.
Crypto Briefing said markets haven't fully absorbed Waller's larger-hike scenario, and the trigger he named is a hot core CPI reading. That leaves monthly core inflation (the 0.3% threshold in particular) as the data point Waller himself tied to a bigger move at the December 8-9 meeting.
Frequently asked questions
What would make Fed Governor Waller support a 50 basis point hike in December?
Waller said a 50 basis point hike should be considered if core CPI rises 0.3% or more month over month. His baseline is a 25 basis point increase at the December 8-9 FOMC meeting, according to Crypto Briefing.
Did the October CPI report change Waller's view on a December rate hike?
No. Waller indicated he would favor a December hike regardless of the October CPI print, which came out the same day as his remarks. Even an improvement from the prior month wouldn't change his view on a 25 basis point move, Crypto Briefing reported.
