Fed Hike Odds Hit 84% After Bitcoin ETFs Lose $1.28 Billion

Fed hike odds for December have climbed to 84%, according to CME Group's FedWatch tool. US spot Bitcoin (BTC) exchange-traded funds (ETFs) shed $1.28 billion last week.

FedWatch derives its odds from fed funds futures. Those contracts give a hold just 15.6%, against 84.4% for a hike to 4.00% to 4.25%. The outflows were the largest weekly total since late June, data tracker SoSoValue reports.

Why Are Fed Hike Odds Rising While Stocks Rebound?

The Federal Reserve held rates at 3.75% to 4.00% on October 28, though two officials dissented for a hike.

The October jobs report then showed 165,000 new positions against forecasts of 65,000. The unemployment rate fell to 4.1%.

Hike odds rose to roughly 77% after the data.

Equities rebounded Monday after a tech sell-off, with the S&P 500 gaining 2.35%. The VIX, a gauge of expected stock volatility, fell 22%. However, the 10-year Treasury yield held near 4.9%.

Oil also fell on a reported US-Iran Hormuz deal, which typically eases inflation pressure. Even so, hike odds climbed further to 84% on Tuesday.

Can Bitcoin Demand Recover if the Fed Hikes?

A higher policy rate raises the opportunity cost of holding Bitcoin, which pays no yield. Meanwhile, ETF flows suggest institutions are already weighing that trade-off.