Traders Price In Four Fed Hikes as Bitcoin Drops Below $83,000
CME FedWatch is pricing in four more rate hikes by 2027, while the strong dollar and higher U.S. Treasury yields are putting pressure on Bitcoin and gold.
Key Takeaways
- Traders are pricing in four 25 basis point rate hikes, which could put the Fed funds rate at 4.75% to 5% in June 2027.
- Bitcoin fell below $83,000, while the dollar index is above 101 and higher rates are pressuring risk assets.
- Gold and government bonds are also feeling the impact of rising rates, with the 10-year yield above 5.1% and the 20-year yield moving toward 5.5%.
Traders are increasingly betting on a longer stretch of higher rates in the U.S., while Bitcoin has dropped below $83,000 (€72,700). CME FedWatch sees a range of 4.75% to 5% for the federal funds rate as the most likely outcome for June 2027. That would amount to four rate hikes of 25 basis points each from the current range of 3.75% to 4%.
Rates Keep Climbing
The pressure is not just on the short end of the market. The 20-year yield is nearing 5.5%, while the 10-year yield is above 5.1%, levels not seen since 2007. Rates are also rising outside the U.S., with pressure on government bonds in France, Germany, the U.K., and Japan.
The Federal Reserve already raised the federal funds rate by 25 basis points this month. That was the first hike since 2023, and it shows that monetary policy has tightened again. At the same time, the U.S. economy keeps running strong, which is fueling expectations that rates could stay high for longer.
Bitcoin and Gold Under Pressure
Higher rates and a stronger dollar are weighing on risk assets. The dollar index is above 101, about 3% higher than at the start of the year. Bitcoin has therefore pulled back from a local peak around $87,500 (€76,700) to below $83,000 (€72,700). A weak U.S. auction had already shown how quickly rising Treasury yields can hit the crypto market. Gold is still just above $4,200 (€3,680), which puts it about 25% below January's all-time high.
The stronger dollar is playing a clear role here. For foreign buyers, dollar-priced assets like Bitcoin and gold become more expensive, which can slow demand. After the rate hike, gold also moved lower briefly, from an intraday high of $4,365.57 (€3,830) to about $4,240.10 (€3,720).
Why This Matters
For European crypto investors, this matters mainly because U.S. rates and the dollar often feed into the crypto market quickly. If the market keeps pricing in higher Fed rates for longer, that could affect sentiment around Bitcoin and other risk assets. It also shows that macro news still plays a big role in the day-to-day price moves of crypto.
