Fed Rate Cut Delay Sparks Rate Hike Surprise for Bitcoin
The Federal Reserve pushed back its forecast for the first interest rate cut to June 2027 after strong US jobs data was released in August. Employers added 162,000 jobs, more than triple the 53,000 economists had predicted. Citigroup revised its forecast, extending the timeline for lower borrowing costs by nine months.
The strong labor market has kept real yields elevated, which competes with risk assets for capital and makes holding Bitcoin less attractive. The price of BTC briefly dropped to $75,000 after the rate hike announcement but quickly rebounded to $86,000 as ETF demand returned and yields eased.
Flow data shows US spot Bitcoin ETFs logged $433 million in net inflows on September 18, indicating institutional demand re-engaged once the hike was priced in. The next round of inflation and payroll prints will be crucial in determining whether yields remain elevated and tighten the liquidity backdrop for crypto.