CryptoSlate
UBS Global Wealth Management reversed course on the Federal Reserve's policy path on September 7, upgrading its 2025 forecast from no rate moves to two 25-basis-point hikes in September and December. The flip came after August nonfarm payrolls beat expectations at 162,000 additions with unemployment steady at 4.1%, well above the trailing 12-month average of 31,000. Fed funds futures now price a roughly 58% chance of a quarter-point hike at the September 15–16 FOMC meeting, up from 52% before the jobs release. Bitcoin traded near $79,375 on the news.
Why it matters
The reversal extends Bitcoin's macro headwind beyond the September meeting through year-end. Bitcoin pays no contractual interest, so when interest-bearing alternatives yield more, the opportunity cost of holding it rises. Higher expected rates also keep Treasury yields supported and the dollar bid, reducing risk appetite across the board. A 2023 IMF working paper found that Fed tightening historically suppresses a common crypto price factor through weaker risk-taking, though the 2025 magnitude remains uncertain.
Market impact
The September meeting now carries double weight, with investors reading both the rate decision and the committee's signal on conditions that could warrant another hike. Governor Christopher Waller's September 3 remarks set the threshold: continued inflation progress justifies a hold, but a hot August CPI could push him toward a hike. The August CPI release on September 11 is the immediate test, with the Fed's communications blackout running through September 17. If inflation confirms the hot labor read, UBS's two-hike path becomes the consensus call, leaving Bitcoin to absorb a less supportive macro backdrop through the December 8–9 meeting.
Frequently asked questions
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What did UBS change about its Fed forecast on September 7?
UBS Global Wealth Management reversed from expecting no Fed moves in 2025 to forecasting two 25-basis-point hikes, one in September and one in December, citing strong August labor data and inflation risks.
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How strong were the August jobs numbers that triggered UBS's flip?
The Bureau of Labor Statistics reported 162,000 nonfarm payroll additions in August, well above the trailing 12-month average of 31,000, with unemployment steady at 4.1%.
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How much of a September rate hike is now priced into futures?
Fed funds futures shifted to a roughly 58% probability of a 25bp hike at the September 15–16 FOMC meeting, up from 52% before the jobs report.
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Why does UBS's December hike call matter for Bitcoin specifically?
Bitcoin pays no contractual interest. Higher expected rates through December keep yields and the dollar bid, raising the opportunity cost of holding BTC and tightening financing conditions for leveraged positions.
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What is the next major catalyst for Bitcoin before the Fed meeting?
The August CPI release on September 11 is the immediate test, with the Fed's communications blackout running through September 17. A hot print would strengthen the case for a September hike and lend weight to UBS's December call.
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