Bitcoin Braces for Hawkish Fed as Rate-Hike Expectations Soar

The latest inflation report from the US has provided all the necessary data for the Federal Reserve's upcoming meeting, and it's leaning hawkish. The jobs report showed that the US economy added 162,000 jobs in August, nearly triple expectations, indicating a strong labor market. Producer inflation surged to 5.4%, while consumer inflation remains well above the Fed's 2% target at 3.4%. Oil prices jumped past $100 per barrel, and diesel prices reached record levels.

The combination of these factors has led to a significant increase in rate-hike expectations, which could spell trouble for risk-on assets like Bitcoin. The asset experienced massive volatility on Friday, dropping from $77,000 to $76,000 before rocketing to almost $80,000 and slipping back to its starting point.

While the subsequent recovery suggests that investors may have already priced in much of the anticipated rate hikes, the September 16 meeting remains a key event. The focus will be on how hawkish policymakers sound afterward and whether markets believe additional hikes are coming.