On Friday, the key macroeconomic indicator delivered a surprise: the probability of a Federal Reserve rate hike at the September meeting collapsed to 50%. Just a day earlier, the market had priced this scenario at 70%, and a week before that, at only 37%. Such volatility reflects the profound uncertainty prevailing in investor expectations.
Judging by federal funds futures, traders are now split almost evenly. One half is pricing in the rate remaining in the 3.50–3.75% range, while the other expects a 25-basis-point hike to 3.75–4.00%. Notably, planning horizons have also shifted: at the start of the week, a second hike to 4.00–4.25% was expected by December 2026, but now the base case has moved to March 2027.
The Iran Factor and Oil Price Swings
Such sharp fluctuations in probabilities are a direct consequence of geopolitical tensions surrounding Iran. Oil prices and bond yields are in turmoil, and with them, the entire market. Investors are frozen, awaiting fresh inflation data that could provide some kind of anchor.
Significantly, there is no consensus within the Fed itself. The agency's head, Kevin Warsh, faced polarizing opinions from colleagues at a recent meeting in Jackson Hole regarding the need for further policy tightening. This only underscores the complexity of the current moment.
Bitcoin, as an asset highly sensitive to liquidity, has responded keenly to the shift in expectations. Over the week, the flagship cryptocurrency's price broke through the psychological level of $80,000 amid news of a possible de-escalation of the Iranian conflict, and on Friday it consolidated around $81,000, gaining about 5% in a day.
A weakening probability of a rate hike automatically reduces pressure on Treasury yields and the dollar, creating a favorable backdrop for risk assets, including digital gold.
My view: Bitcoin holding above $80,000 is not just a technical breakout but a signal of a narrative shift. If inflation data in the coming days brings no surprises and the geopolitical situation remains stable, we could see consolidation in a new range right up until the Fed's verdict on September 16. However, sharp reversals should not be ruled out — the market is currently extremely sensitive to any word from regulator officials.