Goldman Sachs Flips to 25-Basis-Point Fed Hike Call, Bitcoin (BTC) in Focus

Goldman Sachs Flips to a Hike

Goldman Sachs has abandoned its call for the Federal Reserve to stand pat, becoming the last major holdout on Wall Street to forecast a 25-basis-point rate hike at next Wednesday's FOMC meeting. Markets have all but settled the question themselves: rate futures now imply close to a 90 percent probability of a quarter-point move, and Goldman's economists judged that holding rates steady against that near-consensus would risk a violent repricing across assets. Crucially, the bank's conversion did not come from a fresh inflation shock. Its August core PCE estimate was nudged up only slightly, to 0.26 percent month over month, and its baseline inflation view was left untouched — a detail that sits at the center of the fierce debate now splitting the street into two camps, a split that looks less like genuine disagreement over data and more like mutual suspicion between them, the kind of doubt traders usually file under FUD. The irony is hard to miss. In September 2024, the Fed launched its easing cycle with a 50-basis-point cut even as core CPI annual growth still ran above 3 percent. Two years later, core CPI has fallen to a five-year low of 2.4 percent — and markets now expect the central bank to restart a hiking cycle. That reversal is why critics ask whether the coming hike reflects real price pressure or simply the Fed's desire to avoid destabilizing financial markets. Wellington-Altus chief market strategist James Thorne frames it as a “hall of mirrors” effect: no material change in the inflation outlook, yet the central bank may tighten anyway to steady sentiment. Hiking, he argues, will do nothing to expand oil supply, refining capacity or disrupted energy transport routes — it would instead suppress demand, investment and employment while eroding household purchasing power. Thorne adds that wage growth has already cooled to 3.1 percent year over year, with no clear evidence of a wage-price spiral and no sign the energy shock is turning into persistent inflation.

How Bond Yields Reach Bitcoin

For crypto traders, the more actionable question is not whether the Fed hikes, but how the decision travels through the plumbing of global liquidity into Bitcoin (BTC). The transmission runs in a chain: Fed policy shapes rate expectations, rate expectations set Treasury yields, yields define the cost of liquidity, and that cost steers risk appetite — the final stop being risk assets from equities to every memecoin listed on a crypto exchange. The 10-year Treasury yield, set by investors rather than the Fed directly, is the pivotal gauge. When yields rise, the appeal of low-risk, income-bearing instruments strengthens and capital drains away from equities and digital assets; a firmer yield backdrop also lifts the dollar index, which historically trades inversely to Bitcoin. Oil complicates the picture: costlier crude feeds inflation and pressures the Fed to keep policy tighter for longer, while commodity markets more broadly — from crude to palladium — and gold respond to real yields and geopolitical anxiety. Veteran traders warn against trading the headline itself. A hold is not automatically bullish for crypto, and a hike is not automatically bearish — markets move on the gap between expectation and reality. If a quarter-point hike is fully priced in, as it nearly is this week, the announcement can land as a non-event; conversely, a dovish tilt in the statement or the press conference can spark a relief rally simply because uncertainty clears. Against this backdrop, KPMG chief economist Diane Swonk offers the hawkish counterweight. She argues core CPI understates current pressure, with supercore services inflation running 0.5 percent month over month and 3 percent annually. Based on the latest CPI print, she projects August headline PCE up 0.4 percent, core PCE up 0.3 percent and core PCE annualizing at 3.4 percent — well above the Fed's 2 percent target — and expects three hikes by early 2027. Readers tracking the market in real time can follow live spot and futures prices on Gate.

COINOTAG's own aggregate data shows the crypto market is not pricing panic: our Fear & Greed Index reads 69, deep in greed, Bitcoin holds a 68.1 percent share of our tracked universe, and total tracked market cap stands near $2.29 trillion with BTC changing hands around $77,700. Positioning, in short, already assumes a hike — not a surprise.