Bank of America warns Fed may hike 50 bps in December

3 min

Bank of America warned the Federal Reserve could raise interest rates by 50 basis points in December after a third straight hotter-than-expected inflation print. Bitcoin trades at $73,888 on Binance, down 0.6% in 24 hours, and hit $72,727 after the CPI release, its lowest since August 20.

Fed path: risk skewed to larger hikes

Bank of America still projects a 25 bps hike on December 8–9, but sees rising odds of 50 bps and calls the October hold a potential policy mistake. Polymarket odds for a 50 bps or larger move rose from 0.6% Monday to 11.4% Wednesday.

October CPI: headline +0.4%, core +0.3%, both above forecasts. Bank of America estimates core PCE at 3.3% year over year versus the 2% target. Price pressure is broadening into services, with electronics, airfares, and hotels leading increases. The bank also flags a higher chance of another hike in January rather than March.

Fed Governor Christopher Waller said he leans toward 25 bps in December but that a 0.3% core CPI print would warrant considering 50 bps. The core print came in at 0.3%.

Higher rates raise yields on cash and bonds, which tends to divert capital from risk assets like BTC. A faster pace of hikes increases that effect.

BTC performance after hikes: size matters

Across 12 Fed hikes since 2022 measured from 2 p.m. ET announcement to one week later:

Six hikes of 50 bps or more: BTC fell five out of six times; median move: −6%. The worst: −23% after May 2022’s 50 bps hike.
Six 25 bps hikes: BTC fell four out of six times; median move: −0.6%.

Context: all six larger hikes occurred in 2022’s bear market, alongside Terra’s May collapse and FTX’s November collapse, which amplified declines. The most recent hike on September 16 was 25 bps; BTC rose 11.3% in the following week as pre-meeting uncertainty cleared. December’s hike size is the key variable.

Bitcoin technicals: levels in focus

BTC: $73,888, −0.6% 24h, −5.8% 7d. Price sits below daily EMAs. 50-day EMA: $78,897. 200-day EMA: $76,449.

Resistance: $75,599, then $76,449 (200-day EMA), then $78,897 (50-day EMA).
Support: $73,510, then $72,727. Below that: $68,902.

BTCUSDT 1D chart. Source: TradingView.

Outcomes:

Rebound: daily close above $76,449 points to $78,897.
Range: holds between $72,727 and $76,449 until the next Fed signal.
Sell-off: daily close below $72,727 opens $68,902.

Next catalyst: Fed communications into December. If more officials endorse 50 bps alongside Bank of America’s view, BTC may retest $72,727 before the December 9 decision.