Fed's Hawkish Stance Sends Warning Signals for Bitcoin

The final inflation report before next week's highly anticipated Federal Reserve meeting revealed a mixed economic picture. The US economy added 162,000 jobs in August, nearly triple expectations, and producer inflation surged to 5.4%. However, consumer inflation remains well above the Fed's 2% target at 3.4%, and oil prices jumped past $100 per barrel.

The combination of these numbers leans hawkish, suggesting that the Federal Reserve may raise interest rates. The probability of a 25-basis-point rate hike initially jumped to 79% after the CPI release, with futures pricing the odds at 87%. This could spell trouble for risk-on assets like Bitcoin (BTC).

However, the subsequent recovery in the market suggests that investors may have already priced in much of the anticipated rate hikes. The September 16 meeting becomes less about whether the Fed increases rates and more about how hawkish policymakers sound afterward.