The Feds sixth rate-setting meeting of the year is now underway!
The final rate decision will be announced at 2:00 a.m. Beijing time on Thursday, followed by a press conference with Fed Chair Waller at 2:30 a.m.
According to the latest CME FedWatch pricing, the probability of a 25-basis-point rate hike has surged to 92.3%, making it almost a done deal!
Meanwhile, just before the meeting, U.S. President Donald Trump once again called for lower rates, saying: “The United States should have the lowest interest rates in the world.”
Waller is now sitting in a position where there is no safe answer:
Hike rates, and Trump will explode.Keep rates unchanged, and the market will explode.
With a 92.3% probability already priced in, leaving rates unchanged could actually become the “surprise.”
This is not only one of the toughest decisions Waller has faced since taking office—it could also become Bitcoins most important pricing moment of 2026 so far.
BTC is still moving back and forth between roughly $76,500 and $82,000. The consolidation has lasted nearly a month. And the longer the market stays trapped in a narrow range, the greater the probability of a violent breakout or breakdown. As the old saying goes: “The longer the consolidation, the bigger the eventual move.”
The Feds last rate hike came on July 26, 2023. If it hikes again this time, it would mark the first rate increase in three years.
Coming at a time when Bitcoin has been consolidating for an extended period, such a move could amplify the shock to the crypto market, making violent swings in either direction increasingly difficult to avoid.
Meanwhile, across the Pacific, the Bank of Japan is widely expected to raise rates to 1.25% on September 18, while the Bank of England will announce its rate decision on September 17. And on September 15, the U.S. Senate is scheduled to hold a procedural vote on the CLARITY Act.
Four major events are set to explode within 72 hours.
1. The Feds Rate Map: 3.50%–3.75%—An Awkward “Neither High Nor Low” Zone
The federal funds target range currently stands at 3.50%–3.75%. Since cutting rates by 25 basis points in December 2025, the FOMC has kept rates unchanged through several consecutive meetings.
What does this level mean from a historical perspective？
When the COVID-19 pandemic erupted in 2020, the Fed slashed rates to a historic low of 0%–0.25%, while launching a massive asset-purchase program. Bitcoin subsequently entered its third post-halving bull market.
After inflation spiraled out of control in 2022, the Fed was forced to launch one of the most aggressive tightening cycles in its history. It raised rates by 425 basis points that year, pushing the policy rate to 5.25%–5.50%, a 22-year high. Bitcoins bull market ended and the broader market entered a bear phase.
Since then, as inflation gradually cooled, the Fed began cutting rates cautiously, bringing cumulative cuts to 1.75 percentage points by the end of 2025.
So where does 3.50%–3.75% sit？
It is higher than the peak of the 2015–2019 tightening cycle, when rates reached 2.25%–2.50%. It is far above the near-zero-rate era of 2008–2015, but still below the peaks reached in 2023–2024.
The key issue is that although the Fed has cut rates over the past year, the 30-year U.S. Treasury yield has climbed to 5.27%, its highest level since 2007.
Long-term yields rising instead of falling means that financial conditions have not actually eased in a meaningful way.
This is precisely the core issue Waller highlighted at Jackson Hole: there are few signs of meaningful policy constraints in credit and lending markets, making it difficult to argue that financial conditions are clearly restrictive.
In other words, the Fed believes current interest rates may still not be “tight” enough—providing a logical basis for further rate hikes.
2. Wallers Dilemma: A Rate Hike Makes Him a “Traitor,” While No Hike Makes Him a “Liar”
Waller officially took over as Fed chair on May 22, succeeding Jerome Powell.
At his first rate-setting meeting after taking office in June, he immediately left a strong impression on the market: he simplified the monetary policy statement, removed forward guidance, and did not submit his own dot plot.
He was quickly described as a “man of few words who gets things done.”
Waller made his position clear: the Fed had failed to achieve its inflation target for five years, and it was now time to correct that.
At Jackson Hole, Waller outlined a decision-making framework centered on five major themes:
- Inflation trends
- Corporate profits
- Capital expenditures
- Market data
- The labor market
The current data sends mixed signals.
Corporate profits remain strong, with S&P 500 companies posting more than 20% year-over-year profit growth over the past year.
Capital expenditure growth was around 9% annualized in the fourth quarter, with more than half linked to artificial intelligence infrastructure.
The unemployment rate has remained around 4.1%, while the four-week average of initial jobless claims is close to multi-decade lows—suggesting that the labor market remains broadly consistent with full employment.
But inflation remains troubling.
Headline PCE inflation rose 3.7% year over year in July, and it has not reached or fallen below the Feds 2% target since February 2021.
Core PCE inflation rose 3.3% year over year, while its three-month annualized rate remained at 3.1%.
The Cleveland Fed estimates that August core PCE could come in at 3.4% year over year. Although the three-month annualized figure has fallen to 2.7%, that improvement is partly flattered by unusually low inflation readings in June. Once June drops out of the calculation, the average could easily move back above 3%.
Wallers rate-hike logic is therefore straightforward:
Inflation is not falling toward 2% clearly or quickly enough → financial conditions are not tight enough → the economy is strong enough to withstand additional tightening → raise rates.
But the political resistance is equally real.
Trump has repeatedly pressured the Fed to cut rates. White House economic adviser Kevin Hassett has openly argued that “it is important for the Fed to maintain the status quo ahead of the election.”
With the midterm elections approaching, a rate hike would immediately increase borrowing costs across the economy and potentially intensify voters dissatisfaction with the cost of living.
That leaves Waller facing a brutal dilemma:
Raise rates, and he becomes the “traitor.”Keep rates unchanged, and he becomes the “liar.”
Whichever option he chooses, there will be a price to pay.
3. Bitcoin and the Fed: Its Not Simply “Rate Hikes = Down, Rate Cuts = Up”
Looking back at previous cycles, Fed rate hikes have not necessarily meant that Bitcoin would fall.
2017 was the classic exception. The Fed raised rates three times that year, yet Bitcoin surged from around $1,000 at the beginning of the year to nearly $20,000 at its peak by year-end. Although financial conditions were beginning to tighten, the absolute level of interest rates was still very low, while the crypto market itself was undergoing rapid expansion. Bitcoins upward momentum far outweighed the pressure created by changes in interest rates.
2018 was a completely different story. The Fed raised rates four times throughout the year, while Bitcoin continued to decline from its late-2017 peak and eventually entered a bear market. But the decline cannot be attributed entirely to rate hikes. The explosive rally in 2017 had created a massive bubble, while the withdrawal of leveraged capital, a reversal in market sentiment, and problems within the crypto industry itself all contributed to the downward pressure.
After the COVID-19 shock in 2020, the Fed cut rates to zero and launched a massive asset-purchase program. Bitcoin began rising from its lows and reached a new all-time high in 2021. But what truly drove the rally was the enormous liquidity unleashed by the rate cuts: low interest rates, asset purchases, fiscal stimulus, and institutional capital inflows collectively pushed up valuations across risk assets.
2022 was the “textbook case” of a tightening cycle. The Fed raised rates by 425 basis points throughout the year and began quantitative tightening. Bitcoin fell sharply from its highs. As yields on dollar-denominated assets increased, investors became less willing to hold high-risk assets, while rising financing costs put additional pressure on leveraged trading.
The core principle is this:
Markets trade future expectations, not interest-rate changes that have already happened.
If the Fed raises rates but the market has already fully priced in the move, Bitcoin may not necessarily continue falling after the hike is delivered.
Conversely, if the Fed makes an emergency rate cut because the economy is sliding into recession, risk assets may not necessarily rise. The market may initially focus on economic deterioration rather than improved liquidity.
The Feds influence on crypto has become increasingly significant for one fundamental reason: Bitcoin has been integrated into the traditional financial system.
As institutional capital enters crypto through ETFs, Bitcoin is no longer an isolated alternative asset operating independently. It has become part of the global dollar liquidity cycle.
Every Fed rate decision is transmitted to the crypto market through three major channels:
funding costs, risk appetite, and asset-allocation weights.
4. Short-Term vs. Medium-Term: What Happens to Bitcoin After a Rate Hike？
Short Term — The 72 Hours After the Decision
With a 92.3% probability of a rate hike already priced in, the 25-basis-point increase itself has essentially been absorbed by the market.
What will truly drive short-term volatility is Wallers language during the press conference.
If Waller characterizes the hike as a “one-off adjustment”—with the statement suggesting that it is a temporary response to the energy-price shock rather than the beginning of a new tightening cycle—the market could interpret it as a dovish signal.
Bitcoin could then experience a “sell the rumor, buy the fact” rebound.
If the statement or dot plot signals a path toward multiple additional rate hikes, Bitcoin would face significantly greater downside risk.
According to institutional analysis, if the Fed hikes only once, the pressure on risk assets could remain limited. But if it signals multiple hikes, Bitcoin could test support around $75,000, $70,000, or even lower.
There is another possibility: the Fed keeps rates unchanged.
Although the probability is only around 13%, such an outcome would create an even greater disconnect between expectations and reality. The committee would need to issue a longer and more forceful statement explaining why it had chosen to go against market pricing.
Medium Term — 3 to 6 Months
Bitcoins medium-term trajectory will depend on the interaction between two core variables.
The first variable is the Feds tightening path.
HSBC expects the Fed to raise rates by 25 basis points in both September and December, with the median policy-rate projection potentially reaching 4.125% by the end of 2026.
Deutsche Bank goes even further, including another rate hike in March 2027, in addition to hikes in September and December.
If this path materializes, continued increases in real U.S. interest rates would create systematic pressure on risk assets, including Bitcoin.
The second variable is Bitcoins own supply-and-demand structure.
The head of research at Grayscale has pointed out that previous Bitcoin bear markets have generally coincided with slowing economic growth or rising real interest rates. The current decline is likewise occurring against a backdrop of increasing rate-hike expectations and rising actual rates.
He tends to believe that if the Fed concludes this rate-hike cycle while the U.S. economy does not weaken significantly, Bitcoins current low levels could already represent a temporary bottom.
The key assumption behind this view is simple:
The closer the rate-hike cycle gets to its end, the lighter the macro pressure on Bitcoin becomes.
In the short term, Bitcoin is more likely to exhibit a “drop first, rebound later” consolidation pattern.
$76,000 is a key near-term support level. A break below it could trigger additional long-position liquidations.
From a medium-term perspective, however, once the market confirms that the rate-hike cycle is approaching its end, suppressed institutional demand for Bitcoin could begin to return.
5. Three Other Major Events This Week: Market Scenarios Under Multiple Variables
1. CLARITY Act Procedural Vote
2:15 p.m. ET, September 15
Most likely scenario: the vote fails, followed by an initial sell-off and then a rebound.
A rejection of the bill could temporarily damage market sentiment. However, because the market has already largely priced in this possibility—with the probability of passage at only 22.5%—the release of the negative catalyst could instead trigger a “sell the expectation, buy the fact” rebound.
More importantly, a failed vote would mean that the clarification of the U.S. crypto regulatory framework is pushed further back, creating a meaningful drag on the pace of institutional capital entering the market over the long term.
2. Bank of Japan Rate Decision
10:50 a.m. Beijing time, September 18
The market has almost fully priced in a 25-basis-point rate hike to 1.25%, which would be a 31-year high.
Overnight index swap rates imply roughly a 72% probability of a hike, while traders in the interest-rate swap market are even betting on nearly three additional hikes of the same size by July next year.
This is arguably the most dangerous variable for Bitcoin this week.
The Japanese yen carry trade—borrowing low-yielding yen and investing in higher-yielding assets—is an important source of global liquidity.
Continued BOJ rate hikes would increase the cost of yen financing and reduce the attractiveness of the yen as a funding currency for carry trades, potentially triggering large-scale carry-trade unwinding.
In August 2024, the unwinding of yen carry trades triggered severe volatility across global markets, with Bitcoin plunging more than 15% within several days.
If the BOJ raises rates this time while simultaneously signaling a more hawkish future path, the probability of a sharp short-term decline in Bitcoin would increase significantly.
3. Bank of England Rate Decision
5:00 p.m. Beijing time, September 17
A Reuters poll showed that all 65 economists surveyed expected the Bank of England to keep its policy rate unchanged at 3.75%, with the expected voting split at 6–3.
Against a backdrop of tightening global liquidity, leaving rates unchanged would not in itself constitute a major shock.
However, any hawkish surprise—such as a narrower voting margin or language suggesting that the window for another rate hike could come sooner—could provide another reason for Bitcoin to fall.
The market has already priced in roughly 46 basis points of BOE rate hikes by year-end.
At the same time, Brent crude has remained above $100 per barrel, with energy-price pressures increasingly spilling over into broader inflation.
Even if the BOE leaves rates unchanged, the tone of its statement could still be hawkish.
Final Take
The combined impact of this weeks four major events will most likely produce a “drop first, rebound later” market pattern.
The CLARITY Act vote on Tuesday could apply the first wave of pressure.
The Fed decision on Wednesday, followed by the BOE decision early Thursday morning and Thursday afternoon, could add another round of volatility.
The BOJ decision on Friday could represent the biggest tail risk.
However, with the Feds rate hike already 92.3% priced in, the market has largely absorbed that negative catalyst.
After digesting multiple pieces of bad news, Bitcoin could therefore stage a technical rebound.
The real risk is not any single rate hike itself.
It is the liquidity contraction caused by multiple global central banks tightening simultaneously.
A Fed rate hike, a BOJ rate hike, and a hawkish BOE holding rates steady could combine to create the most concentrated tightening shock since 2022.
The key question is whether Bitcoin can defend the critical $76,000 support level amid this global liquidity withdrawal.
If it can, the market may be completing a period of bottom formation.
If it cannot, the break could instead mark the beginning of a new leg lower.