Bitcoin Hovers Near $76,000 Ahead of Expected Fed Hike

Stronger-than-expected US employment data for August prompted investors to reassess the Federal Reserve’s September policy decision, weighing on equities as concern about another rate increase resurfaced. Still, reports differed over whether the jobs release materially changed the odds of a hike. Cryptocurrencies proved comparatively resilient, with Bitcoin avoiding the broader retreat seen across risk assets.

Bitcoin recovered toward $79,000 and held near that threshold, while one market estimate put the probability of a September rate increase at 58%. Zcash outperformed sharply, gaining 45% over the past week. The privacy-focused cryptocurrency also drew attention after Zcash-linked exchange-traded products recorded a $500 million haul, adding institutional-flow momentum to its rally.

The Federal Reserve’s interest-rate outlook is a key driver for global risk assets because higher borrowing costs generally weigh on equities and cryptocurrency valuations. Fed Governor Christopher Waller signaled support for keeping rates unchanged, encouraging investors to anticipate a possible pause in the tightening cycle and renew exposure to volatile assets including Bitcoin.

Waller’s latest remarks lifted both US stocks and cryptocurrency markets, sending Bitcoin sharply higher and triggering a short squeeze. Bearish derivatives positions were forcibly closed as prices moved against traders, with cryptocurrency liquidations exceeding $415 million over a short period. The resulting rush to cover short positions added momentum to Bitcoin’s advance.

Expectations for Federal Reserve policy are reshaping global markets as investors reassess the cost and availability of dollar liquidity. Bitcoin, increasingly traded alongside other high-volatility assets, has come under pressure with equities and gold as traders move away from bets on easier monetary policy. Some market observers warn that another rate increase could prove a policy mistake, potentially tightening financial conditions when risk assets are already retreating.

Rate-hike pricing has strengthened rapidly, with earlier reports putting the implied probability near 60% before Goldman Sachs adopted a more hawkish view and odds of a September increase surged to 87%. Bitcoin first slipped below $79,000 and later fell under $77,000, while Zcash led losses among major crypto assets. Bitcoin’s closely watched “Golden Cross” technical signal also briefly disappeared as attention shifted toward the Fed’s year-end rate path.

Bitcoin advanced ahead of the Federal Reserve’s interest-rate decision as investors weighed monetary policy against renewed geopolitical and inflation risks. The war involving Iran has driven oil prices higher, complicating the Federal Open Market Committee’s outlook and sharpening debate over whether rates should remain unchanged or rise. Even so, the Bitcoin Volatility Index, or BVIV, stayed subdued, signaling limited demand for protection against a sharp market swing.

Bitcoin climbed above $64,000 during Asian trading on June 17, only hours before the Fed announcement, while oil prices surged as much as 8% amid the Iran conflict. Most market participants expected the central bank to hold rates steady, though a minority continued to price in a possible increase. BVIV remained near low levels despite the divided policy outlook, suggesting options traders were not paying significantly higher premiums for defensive positioning.

Bitcoin is highly sensitive to expectations for U.S. interest rates and liquidity, while Federal Reserve rate decisions often drive crypto-asset valuations. Markets are now focused on how Chair Jerome Powell will assess changes in inflation and oil prices. His remarks could shape expectations for rate cuts and determine whether capital continues flowing into risk assets.

Bitcoin briefly touched $76,000 ahead of the Federal Open Market Committee's April 29 decision before retreating to around $74,000, including a short-lived intraday drop below $75,000. Ether, meanwhile, approached $2,200. Traders turned cautious and watched for signs of a hawkish tilt in Powell's post-meeting comments.