The Federal Reserve's next move is looking more like a hike. CME FedWatch data as of May 20 puts the probability of a rate increase at the December 2026 FOMC meeting at 54.1%, with 44.4% odds of no change and just 1.5% for easing. The shift comes as Bitcoin hovers near $77,300 — about 38.7% below its October 2025 all-time high — and spot Bitcoin ETFs bleed nearly $1 billion in two days.
Why the dollar rally is hurting crypto
Reuters reported Wednesday that the U.S. dollar was heading for its largest weekly gain in more than two months, driven by rising energy prices and climbing Treasury yields. The 10-year yield hit 4.67% on May 19; the 20-year sat at 5.19% and the 30-year at 5.18%. Higher yields make Treasuries more attractive relative to risk assets like crypto, and a stronger dollar typically pushes Bitcoin lower. The Fed held its target range at 3.50% to 3.75% at the April 29 meeting, but traders now price more than 55% odds of a December hike — above the 54.1% in the CME data, suggesting market pricing is slightly more hawkish than the futures model.
ETF outflows accelerate
U.S. spot Bitcoin ETFs saw $648.6 million in outflows on May 18, followed by $331.1 million on May 19 — a combined $979.7 million over two days. A previous CryptoSlate report flagged $1 billion in weekly ETF exits that ended a six-week inflow streak. The pattern suggests institutional investors are reducing exposure ahead of a potential rate hike, or at least hedging against the macro headwind. The timing isn't great for a market that was already struggling to reclaim its highs.
Market snapshot
The broader crypto market cap sits near $2.57 trillion with 24-hour volume around $70.49 billion. Bitcoin dominance is at 60.3%, meaning altcoins aren't providing much relief either. With the dollar strengthening and yields elevated, the pressure isn't letting up. The next concrete milestone is the December FOMC meeting — but until then, every weekly ETF flow report and yield move will keep traders guessing.
