Bitcoin Volatility Peaks as Fed Interest Rate Hike Odds Reach 60%: Will Inflation Data Decide?

Bitcoin's price has been volatile in recent days, fluctuating between $78,000 and $82,000. The main reason behind this volatility is the strong US employment data and expectations that the Federal Reserve may raise interest rates.

According to UBS, there is a likelihood of two interest rate hikes from the Fed: one in September and another in December. This prediction was influenced by strong employment data and hawkish messages from Fed Chairman Kevin Warsh at the Jackson Hole meeting.

GOLDMAN SACHS POINTS TO FRIDAY AS CRITICAL DAY FOR FED DECISION

Goldman Sachs also weighed in on the situation, stating that non-farm payrolls exceeded expectations, but the strong employment data alone is not enough to warrant a Fed interest rate hike at its September meeting. Instead, the bank says inflation data will be the main indicator for the Fed's decision.

The probability of an interest rate hike in September is 60.4%, according to CME FedWatch data. This increase in probability indicates that investors' expectations for the Fed's September meeting have become more hawkish.