You may have noticed that lately there’s been a flood of news about a rate cut in December. Data from the CME shows that the probability of the Fed cutting rates by 25 basis points has soared to 89.2%—basically a done deal. Major banks like Goldman Sachs and JPMorgan are betting on a rate cut, and Bank of America is even more aggressive, forecasting that rates could drop all the way to the 3%-3.25% range by mid-next year.

What does this mean for the crypto space? Let’s start with the good news. When interest rates go down, holding non-interest-bearing assets like Bitcoin doesn’t feel like as much of a “loss”—in other words, the opportunity cost drops. Looking back at the September rate cut, Bitcoin shot up to around $117,000, and Ethereum broke above $4,600. Now, a lot of people think that if rates do get cut in December, Bitcoin could kick off a new major rally, with some even calling for a year-end target of $130,000. Plus, products like the Solana ETF are starting to attract institutional money, so liquidity injections are definitely on the way.

But don’t get too excited just yet. The problem is, the market has already pretty much priced in this expectation—the potential benefits of a rate cut are already reflected in crypto prices. When the FOMC decision is actually announced on December 10, we could see a “sell the news” pullback. And don’t forget, uncertainties like geopolitical tensions and regulatory moves are still hanging over the market. SOL is a recent example—even with the rate cut backdrop, it still dropped 14% in a week. As for altcoins, they’re even more sensitive to capital flows, so their volatility will likely be even more extreme than major coins.

In short, a rate cut is highly likely, but how the market actually reacts will depend on the real movement of capital.