Traders have already spoken with their Wallet.

While Federal Reserve officials are still arguing red-faced over inflation data, the market has already given an answer—the probability of a rate cut in December has soared from 30% just a few days ago to 80%. This shift in expectations has come swiftly and fiercely, backed by a series of overlapping signals.

First, New York Fed Chairman Williams threw out the term "recent rate cuts," and then rumors arose that White House economic advisor Hassett might take over the Federal Reserve. More importantly, the latest labor data shows that the economy is indeed cooling down. Traders have sensed an opportunity and are starting to place large bets on a 25 basis point rate cut.

There are obvious rifts within the Federal Reserve. The hawkish camp is still worried about a rebound in inflation, but this time the dovish side has gained the upper hand. According to informed sources, Powell and his inner circle have reached a consensus on the interest rate cut path—weakness in the labor market has given them ample reason to persuade those hesitant committee members.

Interestingly, the Federal Reserve's operation of "pre-meeting guidance" has long become a routine. In the past two years of 20 interest rate meetings, traders have only made incorrect bets 3 times. This time, Williams' statement is widely interpreted by the market as Powell giving an early hint, after all, there is not much time left for adjusting expectations before the December meeting.

For the cryptocurrency market, an increase in interest rate cut expectations usually signals an improvement in liquidity. If a loose monetary policy is indeed implemented in December, risk assets may welcome a year-end rally. Of course, the premise is that inflation data does not cause any further surprises.