Wall Street · Federal Reserve (FED) · Bitcoin · Donald Trump · U.S. · Kevin Warsh · Decrypt
Wall Street Bets on Fed Rate Hike: Here's What It Means for Bitcoin, Bonds and Trump
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Wall Street is bracing for the Federal Reserve to do something it hasn't done since 2023: raise interest rates.
Key facts
- BTC at $73,200 seems like the line in the sand: a daily close below it opens the door to $71,000, and even $66,900 based on technical indicators, cancelling the price explosion that also triggered
- Headline CPI ran at 3.4% annually in August, with core inflation at 2.5%, both comfortably above the Fed's 2% target
- On Tuesday, Bitcoin swapped hands at around $75,700, down about 3.2% on the day after the Clarity Act, crypto’s long-awaited market structure bill, failed its Senate cloture vote
- The Fed held rates steady at 3.50% to 3.75% in July, but that decision passed by a 9-3 vote, with three policymakers already pushing for a hike then
Summary
CME's FedWatch tool puts the odds of a 25-basis-point hike Wednesday at 94.5%, which would push the federal funds rate to 3.75%-4% from 3.50%-3.75%. A Wall Street Journal survey found nearly every major bank expects the September hike, with most forecasting 50 basis points of total tightening in 2026, and Bank of America, Deutsche Bank and RBC calling for 75. The move sets up a political clash: President Trump handpicked Fed Chair Kevin Warsh hoping for lower rates, not higher ones, and has spent the past two weeks publicly pressuring him not to hike. The Federal Open Market Committee wraps up its two-day meeting Wednesday, and CME's FedWatch tool puts the odds of a quarter-point hike at 94.5%, up from under 50% a month ago.