The Federal Reserve policy outlook has undergone a significant change. According to the latest data from the CME FedWatch Tool, market pricing for the Federal Reserve's interest rate trajectory has shifted markedly.

Details matter. At the January meeting, the probability of holding rates steady was as high as 82.3%, indicating that expectations for a rate cut in the near term were not strong. However, the situation started to reverse in March — the probability of holding rates steady dropped to 46.7%, while the combined probability of at least a 25 basis point rate cut broke through the 50% mark for the first time, reaching 53.3%.

What does this reversal mean? Simply put, the market is voting with its funds. Although the January outlook suggested no change, institutional investors generally bet that the Fed's policy turning point will officially occur by the end of the first quarter of 2025. This is much earlier and more certain than previous market expectations.

For risk assets like cryptocurrencies, the clarification of rate cut expectations is an important signal. It suggests that the global liquidity environment may loosen earlier, directly affecting the valuation and attractiveness of high-volatility assets. When the market expects funds to become more abundant, investors typically increase their allocation to risk assets.

From BTC, ETH to other digital assets, such liquidity shifts are decisive factors. The upcoming three months' data releases and Federal Reserve statements may further reinforce or revise this outlook. The market has already made its judgment; now it remains to see how reality will validate it.

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