Bitcoin Tests Fed Hike Odds as Treasury Steps In

Bitcoin traded around $77,250 on Monday, three days before the Federal Reserve’s rate decision. Futures and prediction markets priced roughly an 86.5% to 87% chance of a 25-basis-point increase at Wednesday’s meeting.

Investor expectations shifted after August consumer prices rose 0.4% month over month, following a 0.1% gain in July, lifting the year-over-year inflation rate to 3.4%. In July, the Fed left the target range at 3.50% to 3.75% while three officials dissented, favoring an increase.

The cryptocurrency surrendered part of its early-September advance as odds of a Fed hike rose. Bitcoin traded several thousand dollars below its early-September peak near $82,000 and was roughly flat over the prior 24 hours. On September 4, markets had priced the chance of a hike near 50%.

Longer-term Treasury market activity has also influenced yields. After ten- and thirty-year Treasury yields reached two-decade highs in August, the Treasury on Aug. 19 doubled longer-dated buybacks to $4 billion per operation. The buyback program runs from Sept. 9 through Nov. 4. Treasury Secretary Scott Bessent could use a Treasury General Account that stands near $1 trillion to fund those operations.

UBS strategists have argued that conditions at the long end of the curve, where yields respond to Treasury operations and investor demand, are a key consideration for traders and portfolio managers ahead of the Fed decision.

Rulemaking for dollar-pegged stablecoins is proceeding separately. The GENIUS Act, passed in 2025, takes effect Jan. 18, 2027. The Treasury and the Office of the Comptroller of the Currency have published proposed rules under the law; the Federal Reserve has not released a comparable proposal.

Caitlin Long, chief executive of Custodia Bank, told an interview that Treasury has assumed a larger regulatory role and will determine which foreign stablecoins may access U.S. markets. She predicts tokenized deposits-bank-issued dollars that move on blockchain rails-will displace some stablecoins. Banking groups warned of potential deposit outflows when the statute passed.

Wednesday’s Fed announcement will settle the immediate rate question. The balance of influence over long-term market conditions and the final shape of digital-dollar rules is expected to be decided over the coming year and into 2027 as agencies finalize regulations and Treasury continues market operations.