Bitcoin hovers near $80,000 as Fed hike odds reach 60%

Bitcoin trades at $79,337, pinned below the $80,000 threshold as markets price a 60.4 percent chance of a Fed rate hike at next week's FOMC meeting.

James Butterfill, head of research at CoinShares, said the market's pricing of a September hike still looks too aggressive given softer labor data and the divergence emerging within the Fed over how much weight to place on inflation versus employment.

Dueling speeches from Fed Chairman Kevin Warsh and Governor Christopher Waller left markets split. Warsh's Friday comments were read as hawkish, emphasizing inflation over the weakening employment picture, pushing rate-hike odds toward two-thirds. Waller pushed back, arguing recent inflation data show encouraging signs of disinflation and indicating he would favor holding rates steady in September if August inflation confirms the trend. His remarks helped ease Treasury yields and supported Bitcoin's move above $80,000 before the asset retreated.

Butterfill identified two scenarios that could drive Bitcoin convincingly through $80,000: a resolution of the Iran conflict that lowers inflation and rate expectations, or a further deterioration in confidence in US sovereign debt that accelerates demand for non-sovereign stores of value. Until one arrives, range trading remains the more likely outcome, with the August CPI print on Sept. 11 and the FOMC decision on Sept. 15-16 carrying most of the information.

Bitcoin's weekly trajectory illustrates the macro sensitivity. The asset closed Aug. 31 near $78,570, dipped to a low around $76,300 on Sept. 1-2, then reached roughly $82,180 on Sept. 3 after dovish comments from Fed officials and short covering. The August non-farm payrolls report on Sept. 4, which showed 162,000 jobs added, pushed Treasury yields and the dollar higher, driving Bitcoin back toward the $79,500-$80,000 range. The asset finished the week up 1.7 percent. Ether showed similar volatility, trading between roughly $2,358 and $2,546 during the week before settling near $2,500.

The CME FedWatch Tool, which derives probabilities from 30-day Fed Funds futures, currently shows a 60.4 percent likelihood of a 25-basis-point hike. August CPI data, due Sept. 11, will be the final major inflation print before the FOMC meeting. If core inflation continues to decline from 2.5 percent toward 2.4 percent as some forecasts project, rate-hike odds could ease, potentially allowing Bitcoin to test the $82,200 resistance level. A hot print would likely push Bitcoin toward support at $78,500-$79,000, with a deeper retest of the $76,300-$77,000 zone possible.

The macro backdrop extends beyond the Fed. Eurozone inflation rose to 3.3 percent in August from 2.9 percent in July, driven by energy prices, and the European Central Bank is expected to raise rates by 25 basis points to 2.5 percent this week. US ISM manufacturing and services PMIs came in at 54.6 and 55.4 respectively, indicating economic activity remains in expansion territory and reducing the case for near-term easing.

For Bitcoin holders, the stakes are clear: the asset has traded like gold as an inflation hedge, with macro hedging flows supporting demand during range-bound conditions. A decisive break above $80,000 would require one of Butterfill's two scenarios to materialize. Absent that, the market faces continued consolidation until the CPI print and FOMC decision resolve the policy uncertainty.

This article is for informational purposes only and does not constitute investment advice.