On Friday, market expectations regarding a September rate hike by the US Federal Reserve were sharply revised downward to 50%. This landmark shift occurred within just one day: as recently as Thursday, the probability of such a move was estimated at 70%, and a week earlier it had even fallen to 37%. Such volatility in forecasts reflects the extreme degree of uncertainty prevailing in financial markets.
According to my analysis of futures market data, traders are now almost evenly split. Half of the participants are pricing in rates remaining in the 3.50–3.75% range, while the other half expects a 25-basis-point hike to 3.75–4.00%. Notably, medium-term prospects have also shifted: the scenario of reaching the 4.00–4.25% level is now only considered by March 2027, although early in the week futures pointed to December 2026.
Geopolitics and oil dictate the terms
Such sharp swings in probabilities directly correlate with movements in oil prices and US Treasury yields. The focus of investors remains the escalation of the conflict around Iran, which introduces a serious element of unpredictability into inflation expectations. Significantly, there is no unity within the Fed itself: the head of the institution, Kevin Warsh, has faced polarizing opinions from colleagues regarding the need for further monetary policy tightening.
Bitcoin, which is highly sensitive to the macroeconomic backdrop, has demonstrated impressive momentum. Over the week, the asset not only broke through the psychologically important level of $80,000 on news of a possible de-escalation of the Middle East crisis but also consolidated above it, trading in the $81,000–82,000 range on Friday. The daily gain amounted to about 5%. A reduction in the probability of a rate hike traditionally eases pressure on the dollar and yields, creating favorable conditions for risk assets, including cryptocurrencies.
The continuation of the upward trend until the Fed meeting on September 16 will directly depend on the development of the Iranian situation and incoming inflation statistics. The market is currently in a state of fragile equilibrium, and any new geopolitical or macroeconomic trigger could provoke another wave of volatility.
My expert view: the current correction in expectations is not a trend reversal, but rather a reflection of "hawkish" rhetoric colliding with growing risks to the economy. For bitcoin, this means that upside potential remains, but positions should be entered cautiously, given the high sensitivity to news headlines.