Wall Street Bets on Fed Rate Hike: Here's What It Means for Bitcoin, Bonds and Trump

Key Points:

• The Federal Reserve is widely expected to raise interest rates by a quarter-point at the conclusion of its meeting Wednesday, with a 94.5% probability according to CME's FedWatch tool, reflecting a rapid shift in market expectations over the past month.
• Inflation remains above the Fed's 2% target, with headline CPI at 3.4% and core inflation at 2.5% in August, driven in part by rising oil prices amid the Iran conflict, prompting policymakers to consider tightening despite internal divisions.
• The rate hike comes amid political pressure from President Trump and other officials who favor rate cuts, but Fed Chair Kevin Warsh has maintained the Fed's independence, even as higher rates may impact the November midterm elections and asset markets.
• Bond yields have surged in anticipation of the hike, with the 10-year Treasury yield hitting its highest level since 2007, making government bonds more attractive relative to riskier assets like stocks and cryptocurrencies.
• Bitcoin and other cryptocurrencies have already declined ahead of the Fed decision, with Bitcoin dropping below key technical support levels; analysts suggest the impact will depend on the Fed's future guidance and tone, as altcoins may experience greater volatility.