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Bitcoin, gold, and stocks slide as rate-hike odds rise

CME FedWatch currently puts a September 16 Fed hike chance at 68%, while observers argue a rate increase would be a policy error into an oil-driven supply shock.

Reported · Written up by our desk · Market Structure

Bitcoin and the broader crypto market are under pressure, alongside weakness in gold and U.S. stocks, as markets tie the moves to renewed expectations for a Federal Reserve rate increase this month, according to CoinDesk’s Daybook.

CoinDesk points to a bounce in the U.S. Dollar Index and rising crude oil prices as part of the common thread, with WTI described as rallying to $90 from $70 at the start of July. The newsletter says the oil move is driven largely by supply disruptions tied to the Iran conflict rather than broad overheating in the U.S. or global economy.

While higher energy prices could lift near-term headline inflation, CoinDesk says some observers argue the Fed should not mechanically tighten into that kind of inflation. It cites comments attributed to Wellington-Altus strategist James E. Thorne, who frames an oil shock as a growth shock dressed up as inflation, and Moody’s Analytics economist Mark Zandi, who argues that monetary policy should not respond to a supply shock.

Even so, CoinDesk notes that the odds of a hike are increasing, with CME’s FedWatch tool placing the chance at 68%. The newsletter adds that until the decision on September 16, further oil strength could keep weighing on risk assets, including crypto.

Latest closeGold $4,431.70 ▲1.9%|WTI crude $90.70 ▲0.5%|Bitcoin $77,563.82 ▲0.2%

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