Early 2026, traders expected Fed rate cuts. Now? Markets price in 1-2 rate hikes by December. That's a 180-degree turn in just months. Higher borrowing costs reshape risk-asset appetite.
Bitcoin thrives when rates are low and inflation fears spike. Rising rates make cash yields attractive and kill investor appetite for volatile assets. Bitcoin needs the Fed to stay dovish to rally.
Mid-August CPI data will be make-or-break. If inflation cools, crypto gets breathing room. If it stays hot, expect rate-hike chatter to intensify—and crypto selling pressure to mount.
High inflation + rising rates create a tough environment. Bitcoin's inflation-hedge narrative faces headwinds. Stablecoins and cash yields become more attractive relative to volatile crypto.
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