Goldman Sachs Flips to Rate Hike, Bitcoin Price Stalls Under $80,000

Goldman Sachs has changed its forecast for the Federal Reserve's interest rate decision. Until recently, they predicted that rates would remain unchanged through 2026. However, after a hotter-than-expected inflation print, they now expect a 25-basis-point increase next week.

The bank's researchers led by chief U.S. economist David Mericle have revised their call from a hold to a hike for September 16. This decision was influenced by the August core consumer price index (CPI) inflation rising 0.3% month-on-month against a 0.2% consensus.

CME's Fedwatch tool had the probability of a quarter-point increase at roughly 69% immediately after the release, but it spiked to 86.5% by the end of the session and has since drifted toward 90%. Goldman Sachs is not alone in this prediction, as other institutions such as JPMorgan, Citigroup, Mitsubishi UFJ, and TD Securities have also landed on the same side.

Bitcoin's price has been affected by these rate hike predictions. Its daily 50-day exponential moving average (EMA) briefly pushed above the 200-day EMA, but it slipped back underneath. This reversal may be due to the fact that a rate hike generally precedes a risk-off rotation and Bitcoin's price has failed at the $80,000 level repeatedly this month.