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CME FedWatch data placed the probability of a September interest-rate hike at approximately 70%, up from 37% one week earlier.
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A hike could pressure Bitcoin, XRP and the wider crypto market by lifting Treasury yields and strengthening the dollar.
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Higher borrowing costs would make Jake Claver’s prediction that XRP will exceed $750 before 2027 even more difficult to achieve.
Expectations of a September Federal Reserve rate hike have surged, threatening to disrupt Bitcoin’s recovery and create another obstacle for XRP’s most bullish price predictions.
Financial news account Walter Bloomberg highlighted market pricing that placed the likelihood of an increase at 70%, up from 37% one week earlier.
A separate Kalshi market also favors an increase, although traders on the prediction platform remain much more divided over what the Federal Reserve will do on Sept. 16.
Kalshi Traders Narrowly Favor September Rate Hike
CME FedWatch data placed the probability of a 25-basis-point increase at approximately 70.2% on Wednesday, which would lift the federal funds target range from 3.5%–3.75% to 3.75%–4%.
That represented a sharp change from the 37% probability priced into the market one week earlier.
Kalshi traders were less convinced.
According to the prediction market on Thursday morning:
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A 25-basis-point hike had a 53% probability.
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The Fed keeping rates unchanged had a 46% probability.
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An increase larger than 25 basis points had a 2% probability.
The Fed will announce its decision following a two-day meeting on Sept. 15–16, according to the Federal Reserve’s calendar.
At its previous meeting in July, the central bank kept rates at 3.5%–3.75% but acknowledged that inflation remained above its 2% objective.
Three policymakers voted for an immediate quarter-point increase, indicating that pressure for tighter monetary policy was already building before the latest rise in oil prices.
What Would a Rate Hike Mean for Bitcoin, XRP and Crypto?
A rate increase would generally represent a headwind for crypto.
Higher interest rates raise the return available from cash and government bonds, reducing the relative appeal of volatile assets that do not generate predictable income.
They can also strengthen the US dollar, restrict liquidity and make leveraged trading more expensive.
An IMF working paper examining crypto prices and US monetary policy found that Federal Reserve tightening historically reduced the broader “crypto factor” through the risk-taking channel.
Bitcoin would therefore face a greater risk of losing momentum if the Fed raises rates.
Source: finance.yahoo.com