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Bitcoin holds $73,000 as odds of a December 50 bps rate hike jump

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Bitcoin holds $73,000 as odds of a December 50 bps rate hike jump

Hot inflation lifted bets on a bigger December Fed hike, but even a quarter-point increase could pressure Bitcoin if officials signal higher rates for longer.

The odds of a 50-basis-point Federal Reserve hike in December rose from 0% to 13.6% on Nov. 10 after October CPI beat forecasts, as Bitcoin fell to an intraday low below $73,000.

Meanwhile, the odds of a 25-basis-point hike climbed from 84% to 86.4%, according to a Nov. 10 CME FedWatch snapshot reported by Barron's.

Headline CPI rose 0.4% versus a 0.3% forecast, and core rose 0.3% versus 0.2%, meeting the condition Governor Christopher Waller set for considering a 50 bps move.

The market is pricing more tightening, with 25 bps the dominant outcome. The no-hike probability dropped from 16% to 0%, so the 25 bps odds rose alongside the 50 bps odds.

Weighting the three outcomes, the expected December hike moved from 21.0 bps to 28.4 bps, up 7.4 bps. A 50/50 split between the two sizes would imply 37.5 bps, so the market sits closer to its old expectation than to a 50 bps base case.

The odds ratio favoring 50 over 25 would have to rise more than sixfold before 50 bps became the likelier size.

Dec. 9 decision probabilities from the CME FedWatch snapshot quoted in the supplied article and attributed there to Barron's. Each bar totals 100%.

4%. 8%.



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