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Fed Hike Odds High: Will Treasury Save Bitcoin Rally?
14 Sep
Summary
- Bitcoin trades near $77,250 amid high Federal Reserve rate hike odds.
- Treasury Department, not the Fed, sets terms for digital dollars.
- Consumer prices rose 3.4% annually in August, impacting Fed decisions.
Bitcoin's price is fluctuating near $77,250 just days before the Federal Reserve is scheduled to announce its decision on interest rates. Market predictions indicate an 86.5% probability of a quarter-point rate increase this Wednesday. This comes after the latest inflation report showed a 3.4% annual rise in consumer prices for August, a notable increase from July.
While the Federal Reserve's rate decision is imminent, Custodia Bank CEO Caitlin Long asserts that a more significant development is occurring elsewhere. She believes the Treasury Department is increasingly shaping the landscape for digital currencies, including stablecoins and tokenized bank deposits, with new regulations set to be implemented by January 18, 2027. The Fed's influence appears to be waning in this crucial area.
The Treasury has already demonstrated its market influence by increasing buybacks of longer-dated bonds, which temporarily lowered yields. This action, alongside proposed rules for stablecoins, suggests a strategic shift where the Treasury is taking a more dominant role in financial rulemaking, potentially sidelining the Federal Reserve in the long run.
