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Key Takeaways
Crypto markets breathe a sigh of relief, breaking the recent four weeks of red.
Rate cuts back on the table, as US president hints at Kevin Hasset as a potential chair for the Federal Reserve, who has been supportive of lowering interest rates. Hasset has also served as an adviser for Coinbase, giving him a crypto background.
Chart of the week: The interest rate expectation gap, and how institutional markets are already moving in the direction of rate cuts.
After four straight weeks of red, crypto has finally taken a breath. Bitcoin pushed back above $90,000 USD, and we’ve seen double-digit rebounds across majors like Ethereum and Solana.
Feels a lot different right? A big contrast to the exhaustion I’ve seen from those around me in recent times. I’m sure you’ve experienced the same.
Now, we wait to see if this is a short-term circuit breaker in the market, or something with a bit more momentum. This week I want to dive into what’s changed fundamentally in the market, and how it ties back to the broader thesis I’ve been talking about. Today, it's all about interest rate expectations – and understanding how the market is pricing in and thinking about these elements will be key.
Let’s dig in.
Big Kev for Reserve Chair?
In case you missed it, this week Trump was questioned by the media on who will be the successor to current Federal Reserve chair Jerome Powell in May 2026. He was reluctant to answer but did, ever so subtly, tip his hat to Kevin Hasset. What you need to know is that Big Kev Hasset has been a trusted adviser to Trump and has publicly endorsed his calls for lower interest rates this year. Kev also served as an adviser for Coinbase, giving him a background in crypto.
It’s still early, but this nominee name-drop has shone the spotlight on how traders and investors are thinking about interest rates as we move toward 2026. And while monetary policy is never shaped by one person alone, the Fed Chair does set the tone. Their outlook and communication style all feed into how markets interpret the path ahead.
Recent tone, and the future shift
Markets are impacted by tone as much as data, as we saw in November when current Fed chair Jerome Powell adopted a sobering, hawkish stance, resulting in markets less certain about a potential December rate cut.
However, the mood has swung, and these expectations are now back above 80%. You can check this data out on CME’s Fedwatch – we’re currently at 87% expectations of easing rates in December.
This is exactly what I’ve been pointing at over the last few weeks.
It’ll be interesting to see how (and if!) the market begins pricing in a potential shift to pro-cut Fed Chair. Especially when you consider that the broader committee view on interest rates is targeting 3.1% to 3.6% for 2026. Keep in mind the current rate is hovering between 3.75 and 4%.
And this is where I start to really pay attention to the market’s attitudes towards future rates.
Chart of the week: The interest rate expectation gap in the market
A few weeks back I shared the below chart as a way to track how institutional markets are pricing interest rates over a 90-day window.
We can see it sharply reversing in November, when current chair Jerome Powell delivered that hawkish speech. A rising black line means fewer rate cuts expected in the near future.
And when you look at TOTAL (representing the overall crypto market cap) in blue, the relationship becomes a little clearer. The more durable rallies in crypto have ran while this implied interest rate either remained steady or dropped. These are periods where the broader market is expecting easing or stable conditions in interest rates in the near future.
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This is another reminder of how crypto is closely aligned to the broader liquidity story. I am looking forward to keeping everyone up to date on how this plays out in the weeks to come.
See you all again next week.
Flows
The buy-to-sell ratio for unique Swyftx orders is nominally >$20,000 AUD (rolling data over the last 7 days, captured at 09:00 am AEST).
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