Bitcoin climbs 1% to $63,503 as Goldman calls September hike unlikely

Bitcoin rose 1.2% to $63,503 as Goldman Sachs said a September Federal Reserve rate hike is "very unlikely," citing cooling inflation and softer economic data.

"Under our baseline economic forecasts, the inflation news is more likely to improve further than to deteriorate anew as the year progresses," Jan Hatzius, chief economist at Goldman Sachs, said in a client note. "We still think market pricing for the funds rate is too hawkish."

The bank's assessment follows a string of soft data points. July CPI rose 0.1% month-over-month, while core CPI increased 0.2%, in line with expectations. Producer prices were flat, with core PPI up 0.1%, below forecasts. Retail sales and employment figures also came in weaker than expected. CME FedWatch data shows traders pricing a 30% chance of a 25-basis-point hike in September, with odds of a pause near 70%. On Polymarket, the probability of a September hike has fallen to roughly 25% from about 60% in early August.

Goldman predicts the Fed will hold the federal funds target range at 3.50%-3.75% through the remainder of 2026, with any rate cuts pushed to 2027. For Bitcoin, the easing of rate-hike pressure removes a key headwind after the asset traded in a narrow $62,000-$66,000 range for over a month. Trading volume rose 47% in the past 24 hours, with the 24-hour low and high at $62,666 and $63,641, respectively.

Rate-Hike Odds Slip to 30% on CME FedWatch

The shift in expectations has rippled through fixed income and equities. The 2-year Treasury yield slipped to about 4.12%, while the 10-year yield dropped to 4.676%. The US dollar index fell 0.31% to 99.36. S&P 500 ETFs hit all-time highs in mid-August, and Russell 2000 ETFs also climbed to record levels.

Goldman cautioned that long-term Treasury yields may see limited downside because of heavy government debt issuance and fiscal concerns. Yardeni Research assessed that the 10-year yield trading in the 4-5% range is broadly consistent with current economic fundamentals, citing AI-related capital demand and demographic shifts affecting national savings rates.

Bitcoin's next resistance sits near $66,000, the upper bound of its month-long range, with support at $62,000. A break above $66,000 could open the path toward $70,000, while a failure to hold $62,000 would expose the $58,000-$60,000 zone. The FOMC minutes, due this week, will provide further cues on the committee's thinking.

The Atlanta Fed's GDPNow model suggests third-quarter growth remains solid at roughly 3%, which could complicate the case for aggressive easing. But with two consecutive months of softer jobs and inflation data, Hatzius said it's "hard to see any of the doves shifting toward hikes."

This article is for informational purposes only and does not constitute investment advice.