The probability of a Federal Reserve rate hike at the September 16 meeting has returned to a 50/50 split, according to the CME Group FedWatch tool. The sharp reversal marks a significant shift from Thursday's 70% probability and reflects broader market uncertainty ahead of the central bank's decision.
The tool now shows the benchmark rate equally likely to remain at 3.50-3.75% or be raised a quarter point to 3.75-4.00%. Market pricing for a second rate hike has also been pushed back, with a move to the 4.00-4.25% range now not expected as the most likely outcome until March 2027, rather than December 2026.
Rate Expectations Drive Asset Movements
The volatility in rate expectations has tracked closely with Bitcoin's price action. The cryptocurrency has surged past $80,000 this week, trading near $81,000 on Friday, up roughly 5% over 24 hours. Lower rate hike probabilities typically ease pressure on Treasury yields and the dollar, both tailwinds for Bitcoin's price performance.
Geopolitical Tensions Shape Market Uncertainty
The whipsaw in rate odds has been driven by oil prices and bond yields tied to Iran-related geopolitical developments, which have kept traders uncertain about inflation trends. Federal Reserve Chair Kevin Warsh has faced a divided market on the rate hike question, and the central bank itself remains split over whether to continue tightening monetary policy.
Whether Bitcoin's rally above $80,000 sustains may depend on how geopolitical tensions and the next inflation data develop in the coming days.
