Crypto Market Faces Volatility as UBS Predicts 2 More Fed Rate Hikes Ahead

The crypto market has faced heavy selling pressure recently, with most of the top players in the space staying the red. Notably, the latest decline comes after the hotter-than-anticipated US inflation data has weighed on the sentiment, while raising speculations over a hawkish stance by the US Fed ahead.

Earlier today, Bitcoin price fell below the brief $82,000 support before recovering, while the altcoins also recorded notable losses. Amid this, UBS said that it now expects two more Fed rate hikes through 2027, up from the previous market expectations of just one rate hike in December 2026.

Crypto Market Braces for Volatility Amid Fed Rate Hike Woes

The digital assets space has witnessed heavy selling pressure today, with the crypto market liquidation hitting more than $930 million in the last 24 hours. This comes after the latest inflation data has exceeded market expectations, raising bets on a hawkish stance by the US Federal Reserve.

Amid this, UBS has revised its Fed rate hike outlook following stronger-than-expected US inflation data. The bank now anticipates two more rate increases, potentially in December 2026 and another in March 2027. It previously expected just one additional hike in December 2026.

Market commentator Walter Bloomberg highlighted the revised forecast in a X post. The update points to persistent inflation pressures that could force policymakers to maintain restrictive monetary conditions for longer.

According to the reported assessment, inflation is spreading beyond energy prices into goods and services. This development complicates the Fed’s efforts to bring inflation back toward its 2% target.

Meanwhile, financial markets appear even more cautious. The reported market pricing suggests investors anticipate nearly five rate hikes, exceeding UBS’s forecast. This difference highlights growing uncertainty over the Fed’s next moves.

For crypto market investors, the implications extend beyond interest rates alone. Higher borrowing costs can reduce liquidity and weaken demand for riskier assets like crypto. Having said that, Bitcoin and altcoins may face additional selling pressure if inflation remains elevated and rate expectations continue rising.

US PPI Data Weighs on Investors’ Sentiment

The latest Fed rate hike revision by UBS comes after the US PPI data has spooked crypto market participants. September’s headline PPI increased 1.3% month over month, exceeding the 0.6% forecast. Annual producer inflation reached 6.3%, compared with expectations of 5.4%.

On the other hand, the Core US PPI inflation data also delivered an upside surprise. Prices rose 0.7% monthly, against estimates of 0.3%, while the annual core reading climbed to 5.0%, surpassing the anticipated 4.4%.

Meanwhile, this comes just after a day when US CPI data also exceeded market forecasts and climbed to 3.7%. According to the CME FedWatch Tool, the odds of a December Fed rate hike are now at over 66%.

Now, the crypto market will keep a close track of the US FOMC on October 28 for cues on the potential next move of the US central bank. Hawkish Fed comments on the rate hike plans might trigger further volatility in the broader financial sector, let alone the crypto market.