CoinDesk
Goldman Sachs now sees a September Federal Reserve rate increase as “very unlikely.” Chief Economist Jan Hatzius cited softer retail sales, employment figures and slowing inflation, writing that inflation is more likely to improve than deteriorate as the year progresses and that market pricing for the federal funds rate remains too hawkish. Bitcoin was trading near $63,600, up about 1% on the day, while holding in a $62,000–$66,000 range that has lasted more than a month. CME FedWatch put the odds of a 25-basis-point hike to 3.75%–4% at 30.6%, leaving a majority of traders positioned for no change.
Why it matters
The signal is a softer policy path, with traders mostly expecting the Fed to hold rather than raise. Interest rates affect credit availability and fiat liquidity across the economy, so a reduced chance of another hike can improve the backdrop for risk-on assets such as Bitcoin.
The contrast is visible in crypto's recent history. Aggressive Fed tightening was a major force behind the 2022 slide, while the liquidity response after the March 2020 COVID crash helped fuel a crypto rally. Hatzius's view therefore gives Bitcoin bulls a macro tailwind, provided incoming data continues to support it.
Market impact
Bitcoin's 1% gain is consistent with that risk-on read, but the month-long range shows the market has not produced a decisive breakout. The odds fell after last week's July report showed inflation slowing as expected. The key test is whether new inflation, consumption and labor data validate Hatzius's baseline and pull rate expectations lower. A renewed rise in inflation or firmer activity would challenge the bullish liquidity case, while a September hold is already the majority market expectation.
Frequently asked questions
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Which economic signals support Hatzius's Fed outlook?
Hatzius cited softer retail sales, employment figures and slowing inflation. He wrote that inflation is more likely to improve than deteriorate as the year progresses.
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What does CME FedWatch imply about the September Fed decision?
CME FedWatch put the odds of a 25-basis-point hike to 3.75%–4% at 30.6%, with the majority of traders expecting no change.
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How did Bitcoin trade as the rate outlook softened?
Bitcoin traded near $63,600, up about 1% on the day, while remaining in the $62,000–$66,000 range that has held for more than a month.
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Why can a less hawkish Fed support Bitcoin?
Interest rates affect credit availability and fiat liquidity. A reduced chance of another hike can improve the backdrop for risk-on assets such as Bitcoin.
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What data could challenge the bullish rate outlook?
A renewed rise in inflation or firmer activity would challenge the bullish liquidity case. Incoming inflation, consumption and labor data are the key tests for Hatzius's baseline.
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