Crypto Market Faces Hurdle as Goldman Sachs Predicts Another Fed Rate Hike in October

The crypto market has gone through a topsy-turvy scenario this week, especially after the CLARITY Act failed in the Senate vote. However, it appears that the latest Fed rate hike didn’t have much impact on digital assets, as evidenced by the latest performances of Bitcoin and other altcoins.

Meanwhile, it seems that the market has already priced in a 25 bps rate hike ahead of the Fed’s September gathering. Amid this, Goldman Sachs has fueled discussions, saying that the Fed may lean towards another rate hike in October.

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Goldman Sachs Expects Another Fed Rate Hike in Oct

According to market commentator Walter Bloomberg, Goldman Sachs is now expecting another follow-up Fed rate hike in October. This comes just a day after the central bank announced a 25 bps rate hike on September 16, which has fueled discussions in the crypto market.

In addition, the Fed also hinted at another rate hike this year, signaling that the central bank may turn more hawkish to curb inflation. Meanwhile, Walter Bloomberg noted that the latest call from Goldman Sachs comes as Wednesday’s meeting has turned more hawkish than previously anticipated. It’s worth noting that Goldman Sachs has also predicted a 25 bps rate hike ahead of the central bank’s Wednesday announcement.

In addition, other financial services firms like ANZ, BofA, RBC, and TD Securities also expect a similar move by the Fed in October. According to the CME FedWatch Tool, the odds of a Fed rate hike in October are now at over 50%. But the prediction markets data showed that the odds of a 25 bps rate hike are less than 50% now.

However, it appears that the market was already betting on a potential 25 bps rate hike ahead of the Fed’s meeting. Having said that, the crypto market has witnessed some recovery today, with Bitcoin trading above the $76,000 mark.

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Crypto Market Recovers, But Risk Remains

The recent recovery in the crypto market signals that investors remain confident despite the hawkish monetary policy stance of the US central bank. Despite that, some have still maintained their cautious stance as higher rates often impact riskier assets like cryptocurrencies.

On the other hand, Wall Street banks have also raised their forecast for August core PCE inflation, which might also give the US Fed more room to raise policy rates. Besides, US President Donald Trump has also said that he would respect the Fed’s decision on its rate hike plans.

Considering all these aspects, the crypto market may face heightened volatility if the US Fed continues with its hawkish plans. Although the market stays in the green now, the higher rates could impact the risk-bet appetite of market participants ahead.