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There's an 87% chance the Federal Reserve cuts interest rates in December. That's what traders are betting onPolymarket right now.
If you're trading crypto, this matters. Here's why and what you can do about it.
What's Happening Right Now
Over the weekend, Bitcoin dropped from around $90,000 to under $87,000. More than $200 million in leveraged positions got wiped out in about an hour. The total crypto market lost $140 billion in four hours.
But at the same time:
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BlackRock said Bitcoin ETFs are now their top source of revenue
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Michael Saylor hinted he's buying more Bitcoin
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Black Friday online spending hit a record $11.8 billion
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Gold reached all-time highs
So which is it? Is the market crashing or thriving?
Both. Understanding why is the key to trading December well.
Why the Drop Happened
This wasn't a fundamental breakdown. It was a leverage flush.
Too many traders were betting long with borrowed money. When price dipped over the weekend, thin trading volume triggered a chain reaction. One liquidation caused the next.
Think of it like a crowded exit. Everyone rushes for the door at once, and people get trampled. Once the rush ends, the building is still standing.
The reasons people were bullish haven't changed. They got stronger while prices were falling.
Why 87% Rate Cut Probability Matters
When the Fed cuts rates, borrowing gets cheaper. More money flows into markets, especially into assets like crypto that move fast when liquidity increases.
Here's the pattern:
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Rate cut expectations rise → Dollar weakens
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Dollar weakens → Hard assets (Bitcoin, gold) become more attractive
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More liquidity enters markets → Risk assets rally
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Bitcoin moves first → Altcoins follow
We're at step one. The market is pricing in what's likely coming.
This is why holders like Saylor keep buying during dips. They're positioning for the liquidity shift ahead, not watching today's price.
What Should You Do?
If You're Sitting in Cash
This might be a decent entry zone. Not because the bottom is in, but because:
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Leverage just got flushed (healthier market)
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Macro setup is turning supportive
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Institutions are still accumulating
Consider dollar-cost averaging rather than going all-in. If prices drop more, you buy lower. If they recover, you're already in.
If You're Already Holding
The case for patience is strong. The signals that made you buy haven't changed:
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ETF demand is growing
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Rate cuts are coming
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Adoption metrics are up
Short-term volatility is the price of admission. If you can't stomach 10-15% swings, you might be overexposed.
If You're Actively Trading
December is setting up for choppy, range-bound action until the Fed decision. That's tradeable:
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Grid Trading Bots can buy low and sell high within a range automatically
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Watch funding rates. They reset after the liquidation spike, which usually means calmer conditions ahead
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Keep position sizes smaller than usual until direction is clearer
What to Watch This Month
For the Fed decision:
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Treasury yields (falling = bullish for crypto)
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Dollar index (weakening = bullish for crypto)
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Fed speaker comments before the December meeting
For crypto momentum:
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Funding rates staying neutral or slightly negative = healthy
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ETF inflow data
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Bitcoin holding above $85,000
If BTC breaks below $85K with heavy volume, the picture changes. Until then, this looks like a reset, not a reversal.
The Bottom Line
The market experienced a leverage flush. Prices dropped fast, overleveraged traders got wiped out, and now the market is resetting from a healthier base.
The macro setup is turning supportive. Rate cut odds are at 87%. Institutions are accumulating. Consumer spending is strong. Gold is at all-time highs.
None of that guarantees prices rise tomorrow. But it suggests underlying demand is real and the drop was mechanical, not fundamental.
December will be volatile. Traders who focus on the bigger signals instead of hourly candles have a clearer path forward.
