The Probability of a U.S. Interest Rate Hike Reaches 57%

The probability of an interest rate hike at the September meeting has reached 57%. This change has boosted the dollar and the yield on Treasury bonds, putting additional pressure on Bitcoin and other risky assets. Coin Varsh, the Federal Reserve Chair, stated that if inflation does not return to the 2% target, continuing contractionary monetary policies will be necessary. Previously, the probability of a 25 basis point rate hike was about 35%, which has now risen to 57% to 59%. The yield on U.S. Treasury bonds has increased, and the dollar index remains close to its highest level in two weeks. This situation typically restricts global liquidity and raises the cost of holding non-yielding assets. Bitcoin had benefited in recent weeks from the dollar's decline and the Treasury Department's plan to increase the buyback of long-term bonds. However, with the likelihood of an interest rate hike, less capital is flowing into volatile assets. Additionally, rising oil prices have fueled concerns about persistent inflation. The yield on 10-year U.S. bonds is close to 4.73%, and the Treasury Department defends its plan to double the bond buyback. These two forces are acting in opposite directions, and the outcome of this struggle will impact the cryptocurrency market and the inflow or outflow of capital from Bitcoin funds.