On Friday, the key indicator of US monetary policy delivered a surprise: the probability of a Federal Reserve rate hike at the September meeting collapsed to 50%. Just the day before, this figure stood at 70%, and a week earlier it had even dropped to 37%. Such volatility in expectations is a rare phenomenon even against the current turbulent macroeconomic backdrop.
The rate and bitcoin: synchronized movement
Analyzing futures market data, I see that traders are now effectively split into two camps. Some are pricing in the rate staying in the 3.50–3.75% range, while others expect a 25-basis-point hike to 3.75–4.00%. At the same time, the longer-term horizon has also been revised: the scenario of a rise to 4.00–4.25% has now shifted from December 2026 to March 2027. This signals that the market is beginning to doubt the regulator's resolve.
The correlation with digital assets is obvious. Bitcoin, which is highly sensitive to changes in liquidity, responded to this news with a powerful bullish impulse. Over the week, the flagship cryptocurrency's price broke through the psychological mark of $80,000, and on Friday it consolidated around $81,000–82,000, gaining about 5% in a day. The easing of pressure on Treasury yields and the US dollar created a favorable environment for risk assets.
Geopolitics and inflation: factors of uncertainty
Such sharp swings in market expectations cannot be viewed in isolation from the geopolitical context. The escalation around Iran and the associated volatility in oil prices are adding extra chaos to inflation forecasts. Fed Chair Jerome Powell, at a recent meeting in Jackson Hole, faced a lack of consensus within the committee itself: no unified view on the need for further policy tightening has emerged.
The continuation of bitcoin's upward trend right up to the Fed's verdict on September 16 will directly depend on two variables: the development of the situation in the Middle East and fresh consumer price data due in the coming days. Any hint of de-escalation or slowing inflation could push BTC to new local highs.
My view: The market is clearly underestimating the Fed's resolve to fight inflation, but it is also overestimating the impact of geopolitics on the long-term monetary trajectory. For bitcoin, the current scenario is a perfect storm: a weakening dollar and declining real bond yields have historically acted as catalysts for growth. However, one should not forget that in moments of maximum uncertainty, liquidity can evaporate as quickly as it appeared. I advise investors to remain cautious and diversify their positions ahead of the Fed meeting.