Crypto Stocks Rally as December Rate Cut Odds Surge to New Highs

Key Takeaways

• Crypto stocks rally in response to rising odds of a December rate cut.
• Bitcoin mining companies lead the gains, showing significant performance.
• Market sentiment is influenced by Federal Reserve officials' comments.
• Prediction markets are expanding and gaining influence.

Several crypto-linked stocks experienced a significant uptick on Friday, propelled by prediction-market odds of a December rate cut surging to 87% on Polymarket, marking the highest level this month. This shift in market expectations has sparked a wave of optimism within the cryptocurrency sector.

Three US-listed Bitcoin miners spearheaded the rally, with Cleanspark, Riot Platforms, and Cipher Mining all posting gains during the session, showcasing double-digit growth over the preceding five days. Data from Yahoo Finance revealed that Circle, the issuer of USDC, jumped nearly 10% in early trading, while Michael Saylor’s Strategy and Coinbase recorded more modest increases at the time of this writing.

Bitcoin (BTC) also rose by approximately 7% over the week, recovering from a dip to around $82,000 on November 21, according to CoinGecko data. The volatility observed in prediction-market pricing this month has been largely influenced by statements from Federal Reserve officials. On October 29, Fed Chair Jerome Powell indicated that a December rate cut was "not a foregone conclusion," a remark perceived as hawkish by investors, implying a potential delay in rate cuts and the maintenance of tight financial conditions. Subsequently, Polymarket odds receded from 89% the day before to as low as 22% by November 20.

Sentiment shifted on November 17 after Fed Governor Christopher Waller suggested that the central bank should contemplate cutting rates next month, citing a persistently "weak labor market nearing stall speed" and inflation that is now "relatively close" to the Fed’s 2% target. This statement triggered a reassessment of market expectations.

Prediction Markets Expand as Demand Surges

Prediction markets, such as Kalshi and Polymarket, which enable participants to wager on the outcomes of real-world events, have broadened their scope and impact throughout the year. On November 13, Polymarket entered into a multi-year agreement with TKO Group Holdings to serve as the official prediction-market partner for the Ultimate Fighting Championships and Zuffa Boxing. This partnership followed closely on the heels of a collaboration with North American fantasy sports operator PrizePicks.

During the same month, Kalshi secured $1 billion in funding from Sequoia Capital and CapitalG, elevating its valuation to $11 billion, according to a TechCrunch report citing sources familiar with the transaction. This latest round of funding followed a $300 million raise in October. On November 19, rumors circulated that Coinbase is developing its own prediction-market platform after tech researcher Jane Manchun Wong shared screenshots of an unreleased site. Wong’s images suggested that the product would be offered through Coinbase Financial Markets and backed by Kalshi.

On Wednesday, Robinhood reported that prediction markets have rapidly emerged as one of its fastest-growing revenue drivers, with over one million users trading nine billion contracts since the product’s launch in March through a partnership with Kalshi. This rapid growth underscores the increasing interest in prediction markets among investors.