Bitcoin Holds Firm as Fed Hike Expectations Rise
Bitcoin recovered above $79,000 after an initial drop to around $76,000, later trading near $78,600, up about 1.5% over 24 hours. The move followed US August core CPI rising 0.3% month on month, above the 0.2% forecast, while headline inflation reached 3.4% year on year. The data lifted expectations of a 25-basis-point Federal Reserve rate hike at next week’s meeting, with CME FedWatch pricing the probability at about 85%, up from 60% a week earlier. Markets may have already priced in the decision, limiting Bitcoin’s reaction if the Fed hikes as expected. An unexpected pause could trigger a stronger rally in risk assets. Bitcoin’s resilience, alongside gains in US equities and gold, has supported short-term sentiment. However, Treasury yields remain a key risk, with the 30-year yield briefly reaching its highest level since June 2004. Higher yields offer a competing risk-free return near 5% and could pressure Bitcoin over the longer term. Analysts also noted that Treasury buybacks could later add liquidity and support Bitcoin. Matt Mena of 21Shares said Bitcoin has historically gained an average of 2.13% in the 30 days after core CPI exceeds expectations. Monetary policy, inflation data and bond-market yields remain the main trading catalysts.
Neutral
The immediate price reaction is mildly positive: Bitcoin recovered sharply after the CPI release and remained resilient despite stronger expectations for a Federal Reserve rate hike. Historical data cited by analysts also points to average Bitcoin gains after core CPI exceeds forecasts. However, the hike is largely priced in, which may limit further upside if the Fed acts as expected. Higher Treasury yields increase the opportunity cost of holding Bitcoin and could weigh on risk appetite over the medium term. A surprise decision to leave rates unchanged could produce a stronger short-term rally, while Treasury buybacks could support Bitcoin later by improving liquidity. Overall, the conflicting signals favour a neutral classification, with traders likely to focus on the Fed’s guidance, upcoming inflation data and bond yields.