We Asked AI: What Happens to Bitcoin’s Price if the Fed Hikes Rates in 11 Days?

The initial reaction would be quite negative, the AI platform said.

Following the strong US jobs report from Friday and the hawkish stance taken by Federal Reserve Chair Kevin Warsh the week prior, the odds for a rate hike have grown significantly in just seven days.

Bitcoin’s price reacted to both developments with a minor leg down before it recovered some of the losses. An actual rate increase, though, could have a much more profound effect.

What Happens to BTC

The previous FOMC meeting in July was quite condensed, as it was described as the most unpredictable one in over six years. At the end, though, the Fed refused to change the rates, leaving them at 3.50%-3.75% following a 9-3 vote.

However, the fact that there were 3 policymakers in favor of such a monetary pivot was the first hint at a potential change. The rest came in the past week or so, as Warsh was quite hawkish during his first Jackson Hole speech at the end of August. The blowout US jobs report from yesterday only tilted the odds further, currently being at over 50% for a hike, since it gives the central bank leeway to keep fighting the stubborn inflation through a tighter monetary policy.