Key facts
- Goldman Sachs and JPMorgan now expect a 25 basis point Federal Reserve rate hike at the September FOMC meeting.
- Markets are pricing an approximately 87% probability of a Fed rate hike this week.
- Hotter August inflation data and rising oil prices are contributing factors to the expected rate hike.
- The CLARITY Act is scheduled for a Senate procedural vote on Tuesday.
- Bernstein predicts potential upside momentum for Bitcoin, Ethereum, and XRP if the CLARITY Act receives Democratic support.
- Bitcoin futures open interest has increased by 2.78% in the past 24 hours.
The cryptocurrency market is anticipating significant volatility this week, influenced by a confluence of macroeconomic events and geopolitical uncertainties. Major financial institutions Goldman Sachs and JPMorgan have revised their forecasts to expect a 25 basis point Federal Reserve rate hike at the upcoming September Federal Open Market Committee (FOMC) meeting. This shift in expectation is largely attributed to hotter-than-expected August inflation data, including both PPI and CPI figures, and a resurgence in oil prices, which have climbed 3% to over $103 per barrel.
Markets are now pricing in an approximately 87% probability of this rate hike, a notable increase from previous expectations. The narrative has evolved from whether the Fed would tighten policy to the potential for a sustained new cycle of increases. This macroeconomic backdrop, coupled with escalating tensions in the Middle East and a strengthening US dollar, is expected to exert selling pressure on Bitcoin, Ethereum, and XRP.
Adding to the week's events, the CLARITY Act is scheduled for a procedural vote in the Senate on Tuesday. Bernstein suggests that positive news regarding this act, particularly with potential Democratic support to meet a 60-vote requirement, could lift sentiment and create upside momentum for crypto assets. However, a failed vote, especially if coinciding with hawkish commentary from the Fed, could trigger a significant downturn in the crypto market and related stocks.
Data from the derivatives market indicates a recent uptick in buying sentiment, with Bitcoin futures open interest rising 2.78% in the past 24 hours. Meanwhile, participants on the Polymarket prediction market anticipate Bitcoin reaching $85,000 by the end of 2026, with 67% 'Yes' bets.