According to the latest Federal Reserve observation data released by CME, market expectations for a rate cut by the Federal Reserve have significantly cooled down. What does this data imply? Let's break it down.

First, look at the expectations for the January meeting. The probability of a rate cut is only 2.8%, while the probability of maintaining current rates is as high as 97.2%. In other words, the market has essentially already concluded that the Fed will not cut rates in January. What about March? The situation isn't much better — the probability of a cumulative 25 basis point cut is only 26.8%, with a 72.5% chance of no cut. As for a full 50 basis point cut? That's even less likely, with a probability of just 0.7%.

What does this mean? The previously hot market expectation of a "spring rate cut" has basically been shattered. Many were hoping for a wave of rate cuts at the beginning of the year, but now it seems they will have to keep that hope on hold.

Why is this happening? The Fed's logic is actually quite clear — they are in the final stages of fighting inflation and are more cautious than many might have imagined. Although recent market sentiment has improved, central bank officials still want to observe for a longer period. They want more concrete evidence that inflation is truly under control before they are willing to loosen monetary policy.

Therefore, this "prolonged high-interest-rate battle" is expected to last until mid-year. Ultimately, all uncertainties depend on how inflation data evolves. Don't expect surprises in the short term; the market needs to adapt to this new reality — the Fed is unlikely to cut rates quickly without stronger data signals. This will impact liquidity and risk asset allocation in the crypto market, and it’s worth paying close attention.