Bitcoin: Goldman Sachs Changes Its View on Fed Rates

The crypto market enters a new phase of uncertainty as Goldman Sachs revises its monetary scenario. The American bank now anticipates a rate hike from the Fed next week, following stronger-than-expected core inflation in August. This change comes as Bitcoin trades below $80,000. Investors have adjusted their expectations, with the probability of a hike now approaching 90%. The September decision could weigh on market reactions.

In Brief

• Goldman Sachs now expects a 25 basis point rate hike from the Fed in September.
• U.S. core inflation reached 0.3% in August, compared to the expected 0.2%.
• The probability of a rate hike now exceeds 86% according to CME's FedWatch.
• Bitcoin remains below $80,000 despite a favorable technical signal on the daily chart.
• The "golden cross" of Bitcoin ultimately failed to hold until the close.

Goldman Sachs Abandons Its Status Quo Scenario

On July 31, Goldman Sachs defended the hypothesis of a Fed with no changes until the end of 2026. The bank then estimated that rates would remain stable, with monthly core inflation likely to slow. However, new data has led its analysts to revise this forecast.

Now, the team led by David Mericle anticipates a 25 basis point hike at the meeting on September 16. The FOMC could raise its target range for federal funds from 3.50% to 3.75%. JPMorgan, Citigroup, Mitsubishi UFJ, and TD Securities also share this perspective.

In this context, the price of Bitcoin trades below $80,000, while markets integrate a different monetary environment. The Wall Street Journal reports that investors almost take for granted a hike next week. Attention is thus shifting towards the trajectory of rates following this potential decision.

August Inflation Changes Expectations

The trigger comes from the underlying consumer price index (CPI) for August. This indicator, which excludes food and energy, rose by 0.3% month-on-month, compared to the expected 0.2%. This difference has taken on particular importance in expectations regarding September.

Before the publication, analysts associated 0.2% with maintaining rates. Conversely, a result of 0.3% was expected to strengthen the hypothesis of a hike. The data thus provided the expected signal to quickly modify positions. Bitcoin thus faces expectations of higher rates.

CME's FedWatch tool initially assessed the probability of a 25 basis point hike at around 69%. After the publication, this estimate jumped to 86.5% during the session. Since then, overall market expectations have approached 90%, showing the rapid effect of the inflation figure.

Several Signals Had Prepared the Ground

However, the September hike does not solely rely on inflation. In August, Chase already pointed out that the slower normalization of supply chains around the Strait of Hormuz could facilitate an intervention. The institution also mentioned market doubts about the Fed's credibility in its fight against inflation.

Goldman Sachs now joins several institutions considering a more restrictive decision. Bitcoin is no longer just questioning whether the Fed can raise its rates. It is also trying to determine what this decision will imply for the future of monetary policy.

For Bitcoin, this transition occurs as the price remains below $80,000. The context does not provide a clear signal to anticipate a reaction. The next indications will largely depend on the FOMC's decision and the expectations built around rates.

The Bitcoin Chart Sends an Incomplete Signal

The market, however, showed an interesting technical sign on the same day. On the daily chart, the 50-day EMA briefly crossed above the 200-day EMA. Traders call this crossover a "golden cross" and use it as a potential signal of a trend change. However, the signal did not hold until the close.

On the four-hour chart, another "golden cross" has been visible since the end of August. The trend also retains significant strength on the daily unit, with an ADX of 45. However, the expected technical confirmation did not come at the close. Bitcoin thus remains to be monitored against monetary expectations.

The next FOMC meeting will thus be a major event for the markets. If the 25 basis point hike is confirmed, investors will follow indications regarding the future of monetary policy. In the short term, Bitcoin may continue to evolve at the pace of monetary expectations and technical signals. A sustainable breach of $80,000 will then depend on how the market integrates this new scenario.