Over the past week, Bitcoin has experienced sharp fluctuations. Starting September at around $78,000, BTC soared above $82,000 over the week, reaching its highest level since May. However, it failed to hold at this level and fell back below $80,000.
Bitcoin's volatility is primarily explained by strong U.S. employment data and expectations of a possible interest rate hike by the Federal Reserve, with the probability of a Fed rate hike in September increasing even further.
At this point, two prominent figures have made important assessments regarding interest rates.
UBS Expects Two Interest Rate Hikes from the Federal Reserve!
According to Reuters, UBS forecasts that the Federal Reserve will raise interest rates by 25 basis points each month in September and December.
Previously, UBS had predicted that the Federal Reserve would not make any changes to monetary policy throughout 2026.
Positive Employment Data Changed Expectations!
UBS analysts stated that the change in interest rate expectations was driven by strong employment data published in the U.S. They also pointed to hawkish statements from Fed Chair Kevin Warsh at the Jackson Hole meeting and to supply-side inflation risks. They said these events have strengthened expectations that the Fed may raise interest rates again.
A recent research note from UBS Global Wealth Management states: "The hawkish statements, particularly Fed Chair Kevin Warsh's speech at Jackson Hole, rising supply-side inflation risks, and the August labor market data, were strong enough to change this forecast."
Goldman Sachs Weighs in on Friday!
Ahead of the September Federal Reserve meeting, investment bank Goldman Sachs published an important assessment.
Goldman Sachs analysts, evaluating the August employment report, stated that non-farm payrolls exceeded expectations, and the figures for the previous two months were also revised upward.
However, Goldman Sachs said that strong U.S. employment data published in August alone is not enough for a Fed rate hike at the September meeting. In the bank's view, the key indicator determining the Fed's decision will be inflation data.
At this stage, the focus is on inflation data, and according to Goldman Sachs, moderate U.S. Consumer Price Index figures to be published on Friday, September 11th, could confirm a scenario where the Fed leaves interest rates unchanged in September. Conversely, higher-than-expected inflation could strengthen expectations for a rate hike.
Probability of a September Rate Hike is 60%!
According to CME FedWatch data, markets are pricing in approximately a 60.4% probability of a 25 basis point Fed rate hike at the September meeting. The increase in the probability of a rate hike following the publication of strong employment data indicates that investor expectations for the September Fed meeting have become more hawkish.
What Impact Will This Have on Bitcoin?
The Federal Reserve's interest rate decision is a crucial macroeconomic indicator for the direction of Bitcoin. A rate cut could increase liquidity and risk appetite, creating upward pressure on Bitcoin, while a rate hike or hawkish statements could lead to a stronger dollar and an outflow of investors from risky assets. In this context, markets will closely watch not only the interest rate decision but also the Fed's statements regarding the upcoming period.
*This is not investment advice.
