Fed hawkish shift lifts December hike odds to 77%

At its most recent meeting, Federal Reserve officials kept the policy rate unchanged and removed an easing bias, revising projections toward tighter policy. The median projection for 2026 rose to 3.8% from 3.4%, nine of 18 policymakers now expect at least one hike this year, and 17 officials flagged upside inflation risks. The Fed shortened its policy statement from 341 words to 130. Markets pushed the probability of a December rate increase to about 77%, up from roughly 24% a month earlier.

Wintermute, a crypto market maker and liquidity provider, warned the firmer Fed stance could slow capital flows into digital assets that depend on steady funding. The firm pointed to three main channels for dollar liquidity in crypto: exchange-traded funds that bring institutional money, stablecoins used for trading and settlement, and digital-asset treasuries that reflect corporate or institutional allocations. “For an asset class that needs liquidity arriving through ETFs, stablecoins and DATs, a Fed leaning toward tightening is the opposite of what gets those funnels flowing,” Wintermute wrote.

Geopolitical developments added uncertainty over the weekend after an expected Iran agreement stalled. Israel’s strikes in southern Lebanon prompted Iran to withdraw from talks and a planned signing in Switzerland was delayed. Qatar has been pressing to keep negotiations alive into late June. Wintermute highlighted near-term catalysts tied to both macro data and diplomacy, writing: “May PCE on Friday, and the Qatar talks are the near-term catalysts.”

Market structure amplified price moves. U.S. equity markets were closed for Juneteenth, so adjustments that might have occurred during the trading day instead played out in crypto markets over the weekend. Bitcoin fell about 3.8% for the week, moving from near $67,000 to roughly $62,000 before settling in the low $60,000s. Ether declined about 1.2% and slipped below $2,000, while many smaller tokens were largely flat. The drop triggered roughly $600 million in long liquidations versus under $90 million in shorts.

Energy markets also moved: Brent crude fell about 8.2% during the week on expectations tied to a reopening of a key shipping route. Market participants will watch the May Personal Consumption Expenditures report for updated inflation readings and follow developments in Gulf diplomacy for near-term risk signals. The combination of the Fed’s revised outlook, geopolitical uncertainty and weekend trading dynamics coincided with reduced liquidity and one-sided unwind activity in crypto markets.