The Federal Open Market Committee (FOMC) meets eight times per year to decide interest rate policy. Twelve voting members debate whether to raise, cut, or hold rates. As of August 2026, they're divided over September's decision.
When the Fed raises rates, government bonds and savings accounts offer higher returns. This makes Bitcoin—which has no cash flow—less attractive. Investors rotate out of risk assets like crypto and into safe assets. Bitcoin typically falls.
When the Fed cuts rates, bonds and savings accounts offer lower returns. This makes riskier assets like Bitcoin more attractive. Investors rotate into crypto seeking higher returns. Bitcoin typically rallies on rate cut announcements.
Three FOMC members favor a rate hike next month. Others lean toward a cut. Wednesday's CPI report will likely determine which side wins. This binary event will shape Bitcoin's direction through Q4 2026.
Watch Fed communications closely. Rising rate expectations = sell pressure on Bitcoin. Falling rate expectations = buy pressure. Track Fed funds futures for real-time odds of rate changes. Adjust positions based on shifting expectations.
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