Bitcoin absorbs expectations of four rate hikes
The shift has been rapid. At the beginning of September, Barclays was still anticipating only two Fed rate hikes. One was effectively delivered on September 16, when the US central bank raised its policy rate by 25 basis points, bringing the range to 3.75%-4%. The Fed justified the decision by pointing to still-solid economic activity and inflation that remained too high.
A week later, the market is going much further.
The CME FedWatch reading reported on Thursday now identifies 4.75%-5% in June 2027 as the preferred path. If fully realized, the additional tightening would amount to 100 basis points.
Bonds are already reacting. The 10-year US yield has broken above 5.1%, while the 20-year yield is approaching 5.5%. The dollar index has also risen above 101. Bitcoin, which had recently approached $87,500, has fallen below $83,000.
The mechanism is fairly straightforward. When US bonds offer more than 5%, holding a volatile asset that generates no coupon becomes relatively less attractive for some investors. Financing also becomes more expensive, while a stronger dollar generally reduces risk appetite.
The market is becoming more aggressive than the Fed
One detail nevertheless changes the picture.
Traders are not simply following the Federal Reserve’s latest projections. They are going further.
The dot plot published on September 16 places the median projection from FOMC members at around 4.1% at the end of 2026 and 4.1% at the end of 2027. The scenario currently priced by the market for June 2027, at 4.75%-5%, would therefore be significantly more restrictive.
This divergence warrants monitoring.
The Fed can of course revise its own expectations. Its projections are not a commitment, and upcoming inflation, employment or growth data could quickly change the balance. That is precisely why CPI data have sometimes moved Bitcoin more than rate decisions themselves.
The market currently appears to be paying for insurance against a persistent-inflation scenario. US growth remains resilient, energy costs remain under scrutiny and the supply of Treasury bonds remains high. Schwab also believes the September hike may not be the last, although its own analysis points to at least one additional hike rather than four.
That is the nuance: four hikes do not constitute a decision already made by the Fed. They are a snapshot of the expectations priced into rate markets.
And that snapshot can change very quickly.
$83,000 becomes a test for Bitcoin
Bitcoin had held up better against rising yields at the beginning of the month. On September 2, BTC remained around $78,000 despite heavy selling in global bonds. The current situation is different: long-term US rates have now reached levels the market had not seen for nearly twenty years, while monetary expectations are tightening at the same time.
Falling below $83,000 does not nevertheless mean that Bitcoin’s structure has just collapsed.
BTC is coming off a rebound from around $78,000 and had reached approximately $87,500 before this pullback. The correction therefore represents about 5% from that local high. For now, the shock is primarily macroeconomic rather than the result of deterioration within the Bitcoin network itself.
The next US economic figures are consequently becoming essential. Persistent inflation would reinforce expectations of high rates and could keep bond yields and the dollar under upward pressure. Conversely, several weaker economic readings could quickly remove part of the four hikes currently priced in.
This is probably the most important point.
Bitcoin is no longer facing only a Fed that has just raised rates. It is now confronting a bond market that is beginning to anticipate a genuine tightening cycle through 2027.
There is still a considerable gap between the two.
If traders are right, the cost of capital could remain a lasting adversary for crypto assets. If they have gone too far, falling yields could produce exactly the opposite effect. After several weeks in which the Fed was already dictating part of Bitcoin’s pace, the next move may therefore come less from BTC itself than from the next revision of US expectations.
In brief
- Bitcoin fell below $83,000 after recently reaching approximately $87,500.
- CME FedWatch currently prices in 4.75%-5% as the preferred rate scenario for June 2027, equivalent to four additional 25-basis-point hikes.
- The Fed has already raised rates to 3.75%-4% on September 16.
- The 10-year US Treasury yield has topped 5.1%, its highest level since 2007.
- The FOMC’s median projection remains around 4.1% at the end of 2027, well below the scenario currently priced by the market.
- The four hikes therefore remain a market expectation, not a Fed decision.
