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The probability of major monetary easing in the United States just surged to a historic level. According to traders on Kalshi, one of the world’s leading regulated prediction markets, the odds of three Federal Reserve rate cuts in 2025 have reached an all-time high of 92%. This extraordinary number reflects a rapid shift in market confidence, signaling that investors overwhelmingly expect the Fed to pivot decisively toward easing next year and potentially unleash a powerful rally across stocks, bonds, and crypto.
The Federal Reserve has spent the past two years battling persistent inflation through aggressive rate hikes. But as economic indicators continue softening, inflation cools toward target levels, and the unemployment rate edges higher, the market’s expectations have shifted dramatically. Kalshi traders, who stake real money on macroeconomic outcomes, now believe the Fed will be forced into a deeper easing cycle than previously projected.
A 92% probability of three rate cuts is not just a forecast it is a powerful expression of collective market certainty.
Economists point to several data points fueling this surge. Slowing wage growth, easing consumer spending, and downward-revised GDP forecasts all indicate that the economy is losing momentum. Meanwhile, inflation prints have consistently trended downward, giving the Fed more breathing room to shift from restrictive policy toward stabilization. With the real interest rate currently sitting at multi-decade highs, markets believe the Fed cannot sustain current conditions without risking deeper economic damage.
From a theoretical standpoint, the expectation of multiple rate cuts forms the foundation of what investors call the liquidity cycle the recurring pattern where tightening suppresses growth and easing revives risk appetite. Once liquidity expands, capital typically flows into assets positioned for higher returns: equities, emerging markets, high-yield credit, and increasingly, cryptocurrencies.
If the Fed indeed delivers three rate cuts in 2025, the implications for financial markets could be dramatic. Historically, easing cycles trigger surges in growth stocks, technology sectors, and assets that benefit from long-duration valuations. Cryptocurrencies such as Bitcoin and Ethereum have historically reacted positively, with price cycles heavily influenced by global liquidity trends. In 2020 and 2021, easy monetary conditions powered one of the strongest bull markets in crypto history.
Kalshi’s 92% figure therefore represents more than a prediction it is a signal of potential market transformation.
Bond markets have already responded, with yields edging lower in anticipation of a softer policy stance. Equity indices have begun showing early signs of renewed upward momentum, particularly in tech and semiconductor sectors. Meanwhile, crypto markets, which recently faced macro uncertainty, may benefit tremendously as liquidity conditions lighten and institutional risk appetite increases.
Still, analysts caution against assuming a straight-line outcome. The Federal Reserve remains highly data-dependent, and unexpected inflation spikes, geopolitical tensions, or strong employment reports could disrupt current expectations. Some policymakers have also expressed reluctance to cut too quickly, fearing a revival of inflationary pressure. But for now, prediction markets historically more accurate than traditional forecasting overwhelmingly believe the easing cycle is coming.
The real question is not whether the Fed will cut, but how early and how aggressively. A 92% probability of three cuts suggests a growing consensus that economic conditions may demand substantial adjustment. If that scenario materializes, 2025 could become one of the most pivotal market years since the pandemic era.
For investors, institutions, and crypto traders, the stage is being set for a potential liquidity resurgence one that could fuel the next expansion phase across global markets
FAQs
Q: What is the current probability of three Fed rate cuts in 2025?
Kalshi traders place the odds at 92%, the highest level ever recorded.
Q: Why do markets expect significant rate cuts next year?
Slowing economic data, cooling inflation, and rising unemployment are creating pressure for easing.
Q: How would three rate cuts affect financial markets?
They would likely boost stocks, bonds, and cryptocurrencies by improving liquidity and risk appetite.
Q: Could the Fed still avoid cutting rates?
Yes. If inflation resurges or economic data strengthens unexpectedly, the Fed may delay or reduce cuts.
Q: How does this impact crypto markets?
Crypto typically rallies during easing cycles as liquidity expands and institutional inflows rise.