Bitcoin volatility spiked on August employment and inflation data ahead of the Fed's September 16 meeting, but recovery suggests rate-hike expectations already priced in.
Macro & Markets ·
The US economy added 162,000 jobs in August while producer-price inflation rose to 5.4%, completing the economic data set ahead of the Federal Reserve's September 16 meeting. These figures, combined with consumer inflation remaining above the Fed's 2% target and oil prices surging past $100 per barrel, painted a hawkish backdrop for policy decisions.
Bitcoin experienced sharp intraday swings on the inflation release, dropping from $77,000 to $76,000 before recovering to nearly $80,000, then retreating. Rate-hike probability estimates climbed significantly, with futures pricing showing odds rise to 87% from 72% following the data. Higher borrowing costs typically pressure risk assets by supporting Treasury yields and tightening financial conditions.
The subsequent recovery in bitcoin's price suggests much of the anticipated rate increase may already be reflected in current valuations. Market focus now appears to hinge less on whether a hike occurs—widely expected—and more on the Fed's forward guidance and signals about additional tightening beyond September.