Bitcoin ($BTC) surged sharply following dovish statements from the Fed. Bitcoin climbed above $81,000 as expectations for an interest rate hike diminished after Federal Reserve Governor Christopher Waller signaled he could support holding rates steady in September.
Today, Waller stated that unless there is an unexpected rise in inflation in upcoming reports, the Federal Reserve prefers to maintain the current level of interest rates at its September 15-16 meeting.
Acknowledging that inflation is still "significantly above" the Fed's 2 percent target, Waller said recent data indicates the disinflation process is beginning to gain momentum again. Waller also noted that the impact of tariffs on prices remains limited and that rising energy prices have not created significant inflationary pressure in other sectors of the economy.
Waller summarized his approach by saying, "Let's give disinflation a chance. We can wait one meeting," arguing that a 25 basis point rate hike at one meeting would not quickly bring inflation down to the Fed's 2 percent target. However, Waller also emphasized that he could support a rate hike if inflation accelerates again in August.
The Probability of a Fed Interest Rate Hike Sharply Declined.
Waller's statements led to a significant shift in market expectations regarding the Fed's September meeting.
According to CME FedWatch data, the probability of the Fed raising interest rates in September fell from 63.2% on Wednesday to 48.4% following Waller's remarks. The probability of keeping rates in the current 3.50-3.75% range rose to 51.6%.
Waller's approach differs from the more hawkish stance expressed by Fed Chairman Kevin Warsh last week at the Jackson Hole meeting. Warsh stated that the lower inflation figures observed in recent months are not sufficient evidence of a sustained improvement in underlying price trends.
One of the most critical indicators the Fed will monitor ahead of its September meeting will be the August consumer inflation data, to be published on September 11. Waller added that the interest rate decision will largely depend on upcoming inflation data.
Bitcoin Reached $80,800.
The reduced expectations for an interest rate hike boosted demand for riskier assets, and the cryptocurrency market reacted sharply to these developments.
Over the past 24 hours, Bitcoin rose by approximately 4.3%, reaching $81,300. The market capitalization of $BTC reached nearly $1.62 trillion, with the 24-hour trading volume approaching $33 billion.
The gains were not limited to Bitcoin. Ethereum (ETH) jumped nearly 4% to approximately $2,495, while BNB rose 4.7% and Solana (SOL) increased by 4.6%. XRP, meanwhile, stood out among cryptocurrencies by market capitalization, surging 8.6% to reach $1.45.
*This is not investment advice.
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