Bitcoin retreats below $85,000 as Fed rate-hike expectations weigh on momentum following an eight-month high.
Macro & Markets ·
Bitcoin retreated to near $84,490 on Thursday after reaching an eight-month peak of $87,397 the prior day, as market expectations for a Federal Reserve rate hike in October gained ground. CME FedWatch data shows October rate-hike odds now at approximately 75%, up significantly from initial projections following the Fed's September decision, while December odds sit near 59%. The pullback follows a rapid rally from the mid-$70,000s achieved within a week.
Rate increases typically reduce the appeal of non-yielding assets like Bitcoin by raising borrowing costs, strengthening the dollar, and lifting returns on cash and bonds. The Fed's September move—its first hike since July 2023—brought the benchmark range to 3.75%-4%. Fed Governor Michael Barr signaled further adjustments are likely needed, while inflation data showed core PCE at 3.4%, well above the central bank's 2% target. These factors have prompted traders to price in the possibility of another move at the October 27-28 meeting, up from earlier expectations of a pause.
Most major cryptocurrencies declined alongside Bitcoin over the 24-hour period, with Ethereum and XRP posting minimal gains. Crypto derivatives recorded $348.33 million in liquidations, with long positions accounting for $270.89 million of that total. What remains unclear is whether the near-term trading floor will hold or if further capitulation in leveraged positions could accelerate the pullback.