Bitcoin Faces 87% Fed Hike Odds Wednesday: Will Treasury Save the Rally?

Bitcoin is trading near $77,250 as the market approaches the Federal Reserve’s interest‑rate decision on Wednesday. Futures markets, using the CME FedWatch Tool, show an 86.5% probability of a 0.25‑percentage‑point rate hike.

Fed Rate‑Hike Expectations

Prediction markets on Kalshi and Polymarket price the same hike above 80%. The odds have risen from an even 50/50 on September 4, when Bitcoin was climbing toward $82,000, to the current level. The recent inflation report showed consumer prices up 0.4% in August, raising the annual rate to 3.4% and adding pressure on the Fed.

Bitcoin’s Price Reaction

Bitcoin has slipped several thousand dollars from its recent highs and has been roughly flat over the past 24 hours.

Treasury’s Growing Influence

Caitlin Long, CEO of Custodia Bank, argues that the Treasury Department, not the Fed, is now shaping the framework for digital dollars. The Treasury has already taken actions that moved bond markets, such as doubling longer‑dated buybacks to $4 billion per operation on August 19, which temporarily lowered yields before they rebounded.

Current Treasury operations run from September 9 to November 4, funded from a Treasury General Account holding close to $1 trillion. UBS strategists note that the conditions set by the long end of the bond market are more consequential than the Fed’s immediate move.

Regulatory Landscape

The GENIUS Act, governing dollar‑pegged stablecoins, will take effect on January 18, 2027. Treasury and the Office of the Comptroller of the Currency have published proposed rules, while the Fed has not yet issued guidance. Long says Treasury is assuming more authority, including deciding which foreign stablecoins can enter U.S. markets.

Long expects tokenized deposits—bank dollars on blockchain rails—to eventually outcompete stablecoins, a shift that could affect deposit flows for U.S. banks.

Outlook

Wednesday’s Fed decision will confirm the rate‑hike probability, but the longer‑term impact on Bitcoin may depend more on Treasury’s actions in the bond market and the evolving digital‑dollar regulatory framework, which extends into 2027.