Bitcoin Holds Above $77K as Rate Hike Odds Jump to 87%

Bitcoin is holding above $77,000 as markets price in an increased likelihood of a Federal Reserve rate hike. The August Consumer Price Index (CPI) report showed inflation rose 0.4% month over month and 3.4% year over year, with core CPI increasing 0.3%. This slightly stronger reading pushed expectations for a Fed rate hike higher, with markets now pricing in an 87% chance of a 25-basis-point increase.

Despite the strong August recovery, Bitcoin has struggled to break above $80,000. The inflation report was not dramatically hotter than expected, but the slightly stronger monthly core reading kept pressure on Treasury yields and rate expectations. As a result, BTC remains below $80,000, with immediate resistance sitting around $78,000.

The September 16 Federal Open Market Committee (FOMC) decision is now the main catalyst for Bitcoin's price action. However, it may not be the hike itself that matters most, but rather the Fed's guidance on what happens after the meeting. A balanced guidance from the Fed could limit the downside, while a hawkish signal would likely put more pressure on Treasury yields and crypto markets.

Bitcoin also faces another catalyst in the CLARITY Act vote, which is scheduled for September 15. A successful vote could reduce regulatory uncertainty around digital asset markets, while a failed vote could disappoint investors.