Bitcoin Price to Benefit from Fed Rate Hike? Here’s What Experts Believe

Key Insights:

• A top market analyst suggests that elevated interest rates may not immediately impact Bitcoin price or other risk assets.
• Markets are closely watching US PCE inflation data for clues about another October Fed rate hike.
• BTC has historically provided strong returns in October, which has further fueled market optimism.

Bitcoin (BTC) price and the crypto market are entering a crucial week, with market participants eagerly awaiting the US PCE inflation data later this week. This would be one of the major events to watch this week, as it would provide insights into the potential move of the US Federal Reserve (FED) with its rate hike plans ahead.

Notably, the US central bank has already tightened its monetary policy, raising its benchmark rate by 25 bps in September. In addition, the market is also anticipating another similar rate hike announcement in October.

Despite that, it appears that some market pundits have remained bullish on the long-term trajectory of Bitcoin price and the crypto market. So, here we look at the current market expectations and how they can impact BTC price in the near future.

Bitcoin Price Remains Resilient Despite September Fed Rate Hike

Bitcoin (BTC) price has witnessed a strong rally lately, adding around 4% over the past 30 days. Notably, the crypto has touched a local high of $87,363, before giving up some of its gains and trading near the $84k mark at the time of writing.

Meanwhile, it’s worth noting that BTC price, alongside the broader crypto market, has shown strong resilience lately, despite the Fed raising its policy rates this month. In addition, the CLARITY Act also failed in the Senate vote, which has weighed on investors’ sentiment lately.

Now, the market is also anticipating another Fed rate hike in October. According to the CME FedWatch Tool, the odds of another rate hike in October now sit at over 64%. Having said that, the crypto market participants are now eagerly waiting for the US PCE inflation data, scheduled for September 30.

For context, if inflation comes in hotter-than-expected, it could further cement bets on another Fed rate hike next month. However, despite that, it appears that market experts have remained optimistic about Bitcoin price and the crypto market.

Expert Remains Bullish on BTC & Crypto Market

The Bitcoin price and crypto market are also on investors’ radar as the US Treasury yields remain elevated following the latest Fed rate hike. However, as conventional market theory suggests higher borrowing costs could pressure risk assets, market expert Michael van de Poppe believes rising rates could eventually create a favorable window for BTC.

In a recent post on X, crypto figure Quinten highlighted a notable divergence across the U.S. Treasury yield curve. He noted that the two-year Treasury yield declined from 4.87% to 4.81%, while the 30-year yield climbed to 5.49%.

According to Quinten, the Federal Reserve has considerable influence over short-term rates but cannot directly force investors to finance decades of government borrowing at low costs. Commenting on the observation, Van de Poppe offered a different perspective on the relationship between interest rates and financial markets.

He argued that higher or stable rates do not necessarily spell an immediate problem for markets. Instead, he suggested that rising rates can remain supportive of risk assets until borrowing costs reach levels that begin to materially disrupt economic activity and liquidity.

Simultaneously, the Uptober optimism is another factor that might help push the Bitcoin price higher. For context, CoinGlass data showed that BTC price sees an average return of around 20% in October, with 10 of the last 13 years Bitcoin price has delivered positive returns.

However, investors should note that historical performance doesn’t guarantee future returns. For now, US PCE inflation is likely to play a major role in shaping the crypto market movements ahead.