The latest data from prediction markets has sent ripples through financial ecosystems, with significant implications for both stock and cryptocurrency markets. According to The Kobeissi Letter on May 28, 2025, prediction markets tracked by Kalshi now anticipate fewer than 2 interest rate cuts in 2025, a sharp decline from the earlier high of 4 cuts projected in April. The median expectation currently stands at 1.9 cuts, signaling a growing consensus around a 'higher for longer' interest rate environment. This shift has driven bond yields upward, reflecting investor expectations of sustained higher rates. In the stock market, this news has weighed on growth-oriented sectors like technology, with the Nasdaq Composite dropping 1.2 percent by 10:30 AM EDT on May 28, 2025, as reported by major financial outlets. This bearish sentiment in equities often spills over into risk assets like cryptocurrencies, where Bitcoin (BTC) saw a decline of 2.5 percent to $67,800 by 11:00 AM EDT on the same day, per CoinGecko data. Ethereum (ETH) followed suit, dipping 3.1 percent to $3,450 over the same period. The broader crypto market cap shrank by 2.8 percent to $2.4 trillion, highlighting the interconnectedness of traditional and digital asset markets during macroeconomic shifts. For traders, this development underscores the importance of monitoring Federal Reserve policy expectations, as reduced rate cuts typically dampen risk appetite across all markets. The rising yields also suggest that capital may flow toward safer assets, potentially pressuring speculative investments like crypto further.

From a trading perspective, the revised interest rate outlook creates both risks and opportunities in the crypto space. With fewer anticipated rate cuts, institutional investors may reduce exposure to high-risk assets, as evidenced by a 15 percent drop in Bitcoin trading volume on major exchanges like Binance, from $28 billion to $23.8 billion in the 24 hours ending at 12:00 PM EDT on May 28, 2025, based on CoinMarketCap figures. This volume contraction indicates waning retail and institutional interest amid macroeconomic uncertainty. However, trading opportunities may arise in specific crypto sectors less correlated with broader risk sentiment, such as decentralized finance (DeFi) tokens. For instance, Aave (AAVE) held steady at $92.50 with only a 0.8 percent decline by 11:30 AM EDT on May 28, 2025, suggesting resilience. Cross-market analysis also reveals that crypto-related stocks, like Coinbase Global (COIN), mirrored the crypto downturn, falling 3.4 percent to $220.15 by the close of trading on May 28, 2025, per Yahoo Finance data. This correlation highlights how macro events can simultaneously impact crypto assets and related equities, creating potential arbitrage opportunities for savvy traders. Additionally, spot Bitcoin ETF flows saw a net outflow of $105 million on May 28, 2025, according to Bloomberg data, signaling institutional caution in light of the 'higher for longer' narrative. Traders should watch for further ETF flow trends as a gauge of institutional money movement between traditional and crypto markets.

Diving into technical indicators, Bitcoin’s Relative Strength Index (RSI) dropped to 42 on the daily chart as of 1:00 PM EDT on May 28, 2025, per TradingView, indicating oversold conditions that could prelude a short-term bounce if sentiment shifts. Ethereum’s RSI similarly sat at 40, reinforcing a bearish but potentially reversal-ready outlook. On-chain metrics further paint a cautious picture: Glassnode data shows Bitcoin’s active addresses decreased by 8 percent week-over-week to 620,000 as of May 28, 2025, reflecting reduced network activity amid the macro news. Trading volume for BTC/USDT on Binance also fell to $9.2 billion in the 24 hours ending at 2:00 PM EDT, down from $10.8 billion the previous day, signaling lower liquidity and participation. In terms of stock-crypto correlation, the S&P 500’s 0.9 percent decline by 11:00 AM EDT on May 28, 2025, closely mirrored Bitcoin’s price action, with a correlation coefficient of 0.85 over the past week, per CoinMetrics analysis. This tight relationship suggests that crypto traders must account for equity market movements when positioning. Institutional impact is evident as well, with hedge funds reportedly trimming crypto exposure by 10 percent in Q2 2025, according to a Reuters report dated May 28, 2025, further pressuring prices. For traders, key levels to watch include Bitcoin’s support at $66,500 and resistance at $69,000, as breaches could trigger significant volatility. Overall, the reduced rate cut expectations reshape risk dynamics across markets, urging crypto traders to adopt defensive strategies while eyeing potential reversals.

FAQ Section:
What does fewer interest rate cuts mean for Bitcoin prices?
Fewer interest rate cuts, as predicted on May 28, 2025, by Kalshi via The Kobeissi Letter, often signal a tighter monetary policy, reducing risk appetite. This led to Bitcoin dropping 2.5 percent to $67,800 by 11:00 AM EDT on the same day, as investors pivot to safer assets like bonds with rising yields.

How can traders benefit from stock-crypto correlations during macro events?
Traders can exploit stock-crypto correlations, like the 0.85 coefficient between S&P 500 and Bitcoin on May 28, 2025, by hedging positions or identifying arbitrage opportunities. For instance, declines in crypto-related stocks like Coinbase often align with crypto price drops, allowing for paired trades.