Crypto Rally Stalls Near $94K Bitcoin as Bond Turmoil Spurs Risk-Off Ahead of Fed

Market Overview - The crypto market began December with strong momentum, with Bitcoin approaching $94,000 and Ethereum nearing $3,250, driven by Strategy's purchase of approximately $960 million in BTC and anticipation of the Fusaka upgrade on December 3 [1] - Following the initial catalysts, bullish sentiment diminished, leading to a price reversal during the U.S. trading session on Friday, with aggressive selling observed [2] - A minor rebound occurred over the weekend, but the positive sentiment did not carry into Monday, reflecting a typical pattern in the crypto market over recent months [2] Macro Conditions - Bond markets experienced a sell-off across major economies, initiated by Japan, where the JGB 10-year yield surpassed 1.90%, marking a 30-year high [2] - The increase in bond yields was influenced by rising expectations of a December rate hike by the Bank of Japan and concerns regarding increased issuance from a larger-than-expected FY25 supplementary budget [3] - In the U.S., the 10-year Treasury yield rose above 4.10%, as markets prepared for the Federal Reserve's policy meeting, with expectations of a "hawkish cut" impacting rate sentiment and overall risk appetite [4] Investor Sentiment - Gracy Chen, CEO of Bitget, noted that investors are acting as if the Fed's rate decision is already determined, with Fed funds futures indicating a nearly 90% chance of a 25 basis point cut, up from below 40% just weeks prior [5] - There is a noticeable divergence in risk sentiment, with the S&P 500 up nearly 17% this year, yet U.S. equity funds saw $3.5 billion in outflows last week, while global funds added $7.9 billion [5] - The crypto market remains weaker, with potential for Bitcoin to rise back toward $94,000–$96,000 if a rate cut occurs, while a cautious approach could push it back into the $80K range [5] Volatility Expectations - Options markets are pricing in increased volatility ahead of a week heavy with central bank decisions, with expectations of choppy price action due to a busy calendar that includes the Fed on December 10 and the BOJ on December 19, along with two major labor reports [6]