Key Highlights
- Bond market now prices +125 bps in rate hikes by June 2027, including 4 more 25 bps moves
- Just 9 months ago, markets expected at least 100 bps of rate CUTS over the same window
- Net swing: +225 basis points in Fed policy expectations in under one year — per The Kobeissi Letter
Nine months ago, the same market was pricing at least 100 basis points of rate cuts over that same window. The net swing: +225 basis points in expected Fed policy — from deep easing to aggressive tightening — in under a year.
What Changed
This is not a modest repricing. A 225 bps shift in rate expectations within a single year represents a complete regime change in how institutional bond traders are reading the Federal Reserve’s trajectory. Rate cut bets — which were consensus across Wall Street as recently as early 2026 — have been fully unwound and replaced with hike pricing.
For crypto specifically, the macro tailwind that drove much of 2024–2025’s bull thesis — anticipated Fed easing — has now fully reversed.
Watch the June 2027 Fed Funds futures contract — the specific instrument driving this pricing — as the real-time gauge of whether this four-hike consensus holds or accelerates further.
Frequently Asked Questions
What does ‘4 more 25 bps rate hikes by June 2027’ mean in practical terms?
It means the Federal Reserve is expected to raise its benchmark interest rate by a total of 100 additional basis points — on top of September 2026’s hike — bringing the cumulative tightening to +125 bps by June 2027. Each 25 bps hike increases borrowing costs for consumers, businesses, and risk assets like crypto.
How does a 225 bps swing in rate expectations affect Bitcoin and crypto markets?
Rate expectations are a primary driver of risk-asset valuations. The shift from pricing 100 bps of cuts to 125 bps of hikes removes a key liquidity tailwind that supported crypto’s 2024–2025 bull run. Higher-for-longer rates increase the opportunity cost of holding non-yielding assets and compress risk appetite across markets.
Which market instrument reflects this rate-hike pricing?
Federal Funds futures contracts — specifically the June 2027 expiry — are the primary instrument. These contracts are traded on the CME and allow institutional participants to express views on where the Fed Funds rate will be at a future date. The current pricing of +125 bps is derived directly from those contract prices.
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