Bitcoin Sees Mixed Signals as Fed Rate Hike Odds Fall

The market's expectations for another near-term rate hike have diminished, but this change in sentiment is not all good news for Bitcoin. New York Fed President John Williams stated that September's 25bp hike had reduced the urgency for further tightening, and the Federal Reserve now has time to assess incoming data.

This shift in expectations led to a significant decrease in the implied probability of an October rate hike, from roughly 75% to around 37%. Meanwhile, key economic indicators have provided mixed signals. The August JOLTS openings fell to 7.079M, below expectations and the lowest in five months.

Additionally, September consumer confidence dropped to 81.9 from 88.6, its weakest reading since 2014. However, core PCE came in below expectations at 0.2% month-on-month and 3.0% year-on-year, reinforcing the case for patience.

Despite these softer forward-looking employment and sentiment indicators, the Fed is weighing them against relatively resilient underlying activity. Second-quarter GDP was revised to 2.2% annualised, consumer spending rose 0.9% in August, and initial jobless claims have fallen to their lowest since July.