Volatility in financial markets has peaked: by Friday, the market probability of a US Fed rate hike in September had collapsed to 50%. As recently as Thursday, this figure stood at 70%, and a week earlier it had even dropped to 37%. Such sharp swings in expectations are a rare phenomenon, signaling an extreme degree of uncertainty among investors.
Rate Expectations: A Split Ahead of the September 16 Meeting
An analysis of the futures market, including CME Group's FedWatch data, shows that traders are divided almost evenly. Some are pricing in a hold at 3.50–3.75%, while others expect a 25-basis-point hike to 3.75–4.00%. Notably, longer-term forecasts have also shifted: the scenario of a rise to 4.00–4.25% is now only being considered by March 2027, whereas earlier in the week the market had priced it in for December 2026.
Iran and Oil: Key Drivers of Uncertainty
Such jumps in probabilities directly correlate with movements in oil prices and Treasury yields. At the center of attention is the escalation of the conflict around Iran. Geopolitical tensions are keeping markets in limbo, while investors await fresh inflation data to determine the trajectory of monetary policy.
Notably, Fed Chair Kevin Warsh faced polarizing views on next steps at a recent meeting in Jackson Hole. There is no unity within the organization itself: the question of whether policy tightening is necessary remains open.
Bitcoin, as a high-risk asset, is sensitive to these signals. Over the week, the price broke through the $80,000 mark amid news of a possible end to the conflict, and on Friday it settled near $81,000, gaining about 5% in a day. A lower probability of a rate hike eases pressure on Treasury yields and the dollar, creating a favorable backdrop for cryptocurrencies.
My analysis: Until the Fed's decision on September 16, the market will remain hostage to geopolitics. However, even if rates are raised, Bitcoin has already demonstrated its ability to absorb negative news. The key support level now stands at $78,000–79,000, and as long as it holds, the medium-term bullish trend remains intact.