The decline accelerated as traders assessed the Federal Open Market Committee meeting scheduled for Sept. 15–16. Futures tied to the federal funds rate placed the probability of a 25-basis-point increase above 92%, making a hike the market’s main expectation rather than a low-probability risk.
An increase of that size would lift the Fed’s target range from 3.50%–3.75% to 3.75%–4.00%. The decision is due on Sept. 16, followed by comments from Fed Chair Kevin Warsh that could indicate whether officials view the increase as a single response to inflation or the start of a longer tightening period.
Earlier on Sept. 15, crypto.news reported that the estimated chance of a quarter-point hike had risen to 86.5% from 69.4% on the previous Friday. The probability moved above 92% as the meeting drew closer, showing how quickly traders had adjusted their rate expectations.
Fed hike odds rise as inflation concerns return
Expectations for tighter policy have grown alongside renewed concern about U.S. inflation. Goldman Sachs and JPMorgan forecast a 25-basis-point increase at the September meeting, according to reports cited in the original coverage.
Morgan Stanley also expects the Fed to lift rates by a quarter point in September and again in December, Reuters reported. The bank linked its forecast to persistent inflation, higher oil prices and strong demand tied to artificial intelligence investment.
Rising borrowing costs tend to weaken demand for assets that do not generate fixed income. Investors can earn a higher return from Treasury securities after a rate increase, raising the hurdle for holding volatile assets such as Bitcoin and other cryptocurrencies.
Higher policy rates can also increase the cost of leveraged positions. Crypto traders who use borrowed funds may reduce their exposure when financing becomes more expensive, while a firmer U.S. dollar can place additional pressure on dollar-priced assets.
The market’s response will depend partly on the guidance accompanying the decision. A quarter-point increase has already become the expected result, but any signal of further hikes could force investors to reassess the path for liquidity and borrowing costs.
As earlier market coverage explained, Bitcoin now enters a tightening decision with a larger institutional investor base than it had during the Fed’s previous rate-hike cycle. Spot exchange-traded funds, corporate Bitcoin holders, and other regulated products have linked crypto more closely with traditional portfolio decisions.
Trump says he will respect the Fed decision
National Economic Council Director Kevin Hassett said President Donald Trump would support Warsh’s right to make an independent policy decision, even though the White House does not favor another rate increase.
“President Trump 100% respects the independence of Kevin Warsh,” Hassett said, according to comments reported by Yahoo Finance.
Hassett added that the administration would support Warsh regardless of the outcome. His comments clarified Trump’s position on the Fed’s authority but did not signal White House approval of higher interest rates.
Trump and Hassett have both opposed raising borrowing costs. During a Fox News interview, Hassett said he would be cautious about increasing rates close to the U.S. midterm elections because an independent central bank should avoid becoming part of the political cycle.
The distinction matters for U.S. investors because the Fed sets monetary policy without taking instructions from the White House. Political comments can affect expectations, but the FOMC votes on rates based on its assessment of inflation, employment, and financial conditions.
Recent inflation readings have kept pressure on policymakers. Wall Street firms have warned that the personal consumption expenditures price index, the Fed’s preferred inflation measure, could come in hotter than expected. Persistent price growth would give officials more reason to keep rates elevated after the September meeting.
CLARITY Act vote adds another risk for crypto
Alongside the Fed decision, the Senate is preparing to vote on whether to advance the Digital Asset Market Clarity Act. The procedural vote requires 60 senators to support opening debate on the measure.
A successful cloture vote would not pass the bill into law. It would allow the Senate to begin considering the legislation, after which lawmakers would still face an amendment process, another procedural vote, and possible negotiations with the House.
Republicans hold 53 Senate seats, leaving the bill dependent on support from several Democrats. Negotiations became more uncertain after Democrats presented a counteroffer that met resistance from Republicans shortly before the scheduled vote.
A recent CLARITY Act analysis noted that the revised text had expanded from roughly 616 pages to 635 pages. The proposal included language covering the division of authority between the Securities and Exchange Commission and the Commodity Futures Trading Commission, along with provisions affecting the treatment of individual digital assets.
For American crypto holders, the bill could determine which federal regulator oversees different parts of the market and how tokens are classified under U.S. law. Failure to advance the measure would leave the current regulatory framework in place while lawmakers decide whether to revise or reintroduce the proposal.
Crypto-linked stocks also fell before the vote, including companies whose revenue or balance sheets depend on digital assets. Shares of Strategy, Coinbase, Circle, and Robinhood faced selling as investors reduced exposure to both the legislative uncertainty and the possibility of higher U.S. interest rates.
The market entered the week in a less defensive position. A weekly market recap published on Sept. 12 placed Bitcoin near $80,000 and reported $463 million in weekly outflows from U.S. spot Bitcoin ETFs. Continued withdrawals from the funds would show that regulated investment products remain a source of selling pressure during the policy-heavy week.
