Bitcoin Falls 1.3% as Waller Backs a December Rate Hike

Bitcoin fell 1.3% to $74,080 on Tuesday, after Federal Reserve Governor Christopher Waller backed a 0.25-percentage-point increase at the Federal Open Market Committee’s Dec. 9 meeting.

Market-implied odds of a December increase climbed to 96.3% from 76.3% after his remarks. Nasdaq-100 futures also fell 0.4% before U.S. trading opened Tuesday.

Waller said he would support a quarter-point increase, or 25 basis points, “even if October inflation improved from September.” He added that inflation “substantially higher than expected” could call for “a stronger response.”

His remarks narrowed the debate. The 20-percentage-point move in pricing left a hike close to a settled question in markets, while the inflation data still held greater influence over the policy choice.

Inflation data sets the test

Tuesday’s scheduled October Consumer Price Index release was expected to show a 0.3% monthly increase, compared with September’s 0.6% rise.

Waller also cited September’s Personal Consumption Expenditures price index. The measure rose 0.5% from a month earlier and 3.7% over 12 months. The Fed targets PCE inflation.

That distinction matters when reading Waller’s conditional support. Tuesday’s CPI release offers a near-term reading on inflation. The Fed’s target concerns PCE.

An improvement in October inflation would fit the condition under which Waller said he could still support a quarter-point increase. A substantially higher-than-expected outcome could push the discussion toward a stronger response. His baseline preference did not rule that out.

His comment concerned the December meeting. The next rate decision is scheduled for Dec. 9.

What does this change for crypto?

For Bitcoin holders, the immediate change is a higher probability of tighter U.S. policy by year-end. Higher rates can weigh on crypto and other risk assets by tightening financial conditions and reducing liquidity.

Bitcoin’s 1.3% decline and the 0.4% drop in Nasdaq-100 futures fit that broader risk-asset response. Rate expectations supplied the common thread between crypto and U.S. equity futures.

For market participants, the meeting now carries a different risk: a larger increase than the quarter-point move reflected in pricing. Waller’s warning about substantially higher-than-expected inflation makes that possibility relevant before Dec. 9, even if the baseline remains a quarter-point increase.

That leaves the incoming data with greater weight. A CPI print above the expected 0.3% would put Waller’s warning about stronger inflation in focus. A softer reading would not automatically remove his support for the quarter-point increase.

The next fixed point is the Dec. 9 FOMC decision. A materially above-expected October CPI reading could broaden the case for a stronger policy response, while a softer print would test the market’s 96.3% expectation of a quarter-point increase.