The CME Federal Funds futures tool shows that the probability of a rate cut in January has fallen to 22.1%. Cleveland Fed official Hammack recently stated bluntly that there is no sufficient reason from inflation for a rate cut to be hastily advanced. This means that the market's expected easing window has been pushed back considerably.

Why is BTC so sensitive to changes in interest rate policy? To put it bluntly, it is the most extreme duration asset in the market – high leverage, zero cash flow, purely supported by consensus. Once the monetary base interest rate remains high, investors holding USD have a risk-free return. Marginally, new money entering the market will no longer be directed towards the highest-risk areas but will instead withdraw from the most volatile varieties first.

How did the interest rate hike cycle in 2022 unfold? It wasn't an immediate crash, but rather a gradual squeezing of trading enthusiasm—trading volume plummeted, positions shrank, and then several emblematic liquidation events completely wore out the patience of the bulls.

The current rhythm is somewhat similar. BTC may not necessarily plummet significantly today; instead, it might choose to move sideways and consolidate, trading time for space. Boring, repetitive, and repeatedly testing the waters, this kind of exhausting trend is often a precursor to a major adjustment—bullish confidence is gradually eroded with each failed attempt.