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Ahmed Barakat
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Kalshi is pricing a 25-basis-point September rate increase at 59% against 42% for no change. Other reported measures put the probability at about 60% to 68% before the September 15-16 Federal Open Market Committee meeting. On the other hand, Fed rate-cut odds have dropped to just 1%, as all hope of a possible cut fades.
That range creates a clear question for risk assets, including Bitcoin. If the Federal Reserve holds rates while market pricing continues to favor an increase, the difference between the expected outcome and the decision could prompt a reassessment of bearish positioning.
A hold alone would not establish a bullish outcome; the market response would also depend on the Fed’s accompanying message. A hold, accompanied by a dovish speech from new SEC Chair Kevin Warsh, could provide a boost to the crypto market.
Fed Rate Cut Odds Hit Near-0%: Why Has the Hold-or-Hike Tension Intensified?
The repricing follows a public policy split. Trump said that US interest rates were too high and said he respected Kevin Warsh and his responsibility to make the necessary decision. He had previously said he would not have selected Warsh to lead the Fed if he wanted interest-rate increases.
Warsh’s Jackson Hole address emphasized inflation and indicated that policymakers still had work to do if price pressures were not moving toward the Fed’s 2% target quickly enough.
The rate market subsequently made a September increase its most heavily priced outcome. The current Kalshi market snapshot shows a total volume of $31.3M.
The reported probabilities vary by venue and measurement time. That makes the range more useful than any single reading: the central point is that markets had shifted toward expecting tighter policy less than three weeks before the meeting.
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The Statements Driving the Repricing
Trump’s objection to prevailing rates sits alongside his stated respect for Warsh’s role, leaving markets to assess the Fed chair’s signals rather than the White House’s preference. Warsh’s inflation-focused message from his Jackson Hole debut became a key reference point for the September decision.
The shift in rate expectations also coincided with pressure across other markets. FinanceFeeds reported Nasdaq-100 futures down 1.19% to 29,163.25, Dow futures lower by 341 points to 52,899, and S&P 500 futures down 0.62% to 7,651.50 in Tuesday premarket trading.
WTI October crude was up 2.44% at $87.85, while Brent traded near $90, adding another inflation-sensitive input to the market backdrop.
With Fed Rate Cut Odds Slashed, a Hold Could Be Bullish for Bitcoin
The distinction between the rate decision and market expectations is central. A Fed hold would leave rates unchanged and would not, by itself, signal easier policy. It could be interpreted as a dovish surprise only if markets still strongly favored an increase immediately before the decision and if the Fed’s guidance did not offset that surprise.
For Bitcoin, that distinction means a hold could prompt a reassessment of positions built around a rate increase, but it would not guarantee an advance. A hold accompanied by language that keeps further tightening firmly in view could produce a very different reaction from a hold paired with softer guidance. The decision, the policy statement, and the broader interpretation of inflation risks would therefore need to be considered together.
The wider macro setting underscores that uncertainty. The 10-year Treasury yield was reported in a range of roughly 4.75% to 4.80%, with Trading Economics describing a fifth consecutive session of rising yields and the highest level since January 2025. Higher yields and oil prices were among the factors weighing on risk assets in the reported market moves.
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Forward Scenarios Into the September Meeting
Three broad outcomes frame the approach to the September FOMC decision. If rate-increase odds remain elevated and the Fed holds with relatively soft guidance, the gap between market pricing and the decision could support a reassessment across risk assets, including Bitcoin. That would be the scenario most consistent with a potential short-squeeze discussion.
If the Fed raises rates, the outcome would align more closely with the probabilities reported by Polymarket, CME FedWatch, Fed funds futures reporting, and Trading Economics.
If the Fed holds while stressing that additional tightening remains possible, the apparent dovish surprise would be weaker. In either case, the relevant question is not only whether the Fed changes rates, but how the decision compares with the expectations that have developed since Jackson Hole.
Inflation developments, Treasury yields, oil prices, and the evolution of rate probabilities remain part of the backdrop into the September 15-16 meeting. The available evidence supports a market focused on a possible increase, rather than a single definitive probability or a predetermined reaction in Bitcoin.
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