Here is why traders are pricing in a rate hike and how it impacts bitcoin
Traders are now anticipating potential Federal Reserve rate hikes due to rising inflation fears and geopolitical tensions, impacting asset markets including bitcoin.Summary
Markets have significantly shifted expectations regarding Federal Reserve monetary policy, moving from anticipating multiple rate cuts in 2026 to now pricing in potential rate hikes this year. This change is largely driven by renewed inflation fears stemming from escalating Middle East tensions, which have pushed Brent Crude oil prices to $111 per barrel. Core inflation remains above the Fed’s 2% target, and longer-term inflation expectations are also elevated. While bitcoin has held relatively steady, outperforming gold and the Nasdaq in the short term since the start of the Iran war, it continues to underperform these assets over longer timeframes. The US economy may benefit from higher energy prices and increased military spending, potentially offsetting a sharp GDP decline.
(Source：CoinDesk)