The recent Fed rate cut game has completely turned around. The previously marginalized market bet of "zero rate cuts or only one" is now making a strong comeback in the interest rate futures market, catching the market off guard.

According to CME data, the probability that the Federal Reserve will not cut rates or only cut once this year has soared to 37%, a jump of 11 percentage points from the end of last year. And what about investors who once favored three or more rate cuts? Their probability has dropped directly from 43% to 32%. How abrupt is this shift? Just look at the underlying data.

The resilience of the US labor market has exceeded expectations. During the week of January 10, initial unemployment claims were only 198,000, far below the market expectation of 215,000. Coupled with the December unemployment rate still declining, this data directly shattered the expectations of easing. Short-term US Treasury yields led the gains, the yield spread between short and long-term bonds narrowed, and institutions are adjusting their strategies, shifting from a previously steep yield curve to a bullish outlook on short-term US debt—this significant change in direction reflects a recognition that the rate cut window has been completely closed.

Fed officials are also following suit. As soon as the phrase "monetary policy is in a good place" was announced, hawkish officials immediately supported pausing rate cuts, further suppressing expectations of rate cuts. Institutional forecasts have also become more cautious: no rate cuts in 2026, and possibly rate hikes in 2027. Maintaining high interest rates for the long term has become a consensus.

For the crypto world, this is definitely not good news. Every shift in Fed policy has ripple effects—historically, changes in Fed policy have triggered Bitcoin single-day drops of over 5% and the liquidation of over 250,000 traders. Now, with the rate cut window narrowing and liquidity easing expectations cooling, whether risk assets can withstand the pressure remains an open question.

After such a long period of high interest rates, how much longer can liquidity in the crypto space hold up? What do you think about this round of reversal in rate cut expectations? Can Bitcoin withstand the test of tightening liquidity?