Traders now favor a September Fed rate hike as Bitcoin holds near $78,000

Prediction markets shift on Fed rate expectations

Traders on prediction market Polymarket now favor a Federal Reserve interest rate increase in September after Chair Kevin Warsh’s speech at the Jackson Hole symposium. The odds of a quarter-point hike rose to 55.5%, up from 28% on Friday, while the chance of no change fell to 43.5%.

Bitcoin held near $78,000 despite the shift, ending the day down 0.65% at $78,317. The broader crypto market saw declines, with 88 of the 125 largest non-stablecoin tokens falling.

Key numbers

• Polymarket now prices a September rate hike at 55.5%, up from 28% on Friday.
• Bitcoin traded at $78,317, down 0.65% over 24 hours.
• Ether fell 0.61% to $2,464, while Solana dropped 3.3% to $103.05.
• Total crypto market value fell 2.6% to $2.65 trillion.

Warsh’s Jackson Hole speech moves markets

In his first speech as Fed Chair at the Kansas City Fed’s symposium, Warsh said recent inflation data had not convinced him that underlying trends were improving. He noted that 49% of goods and services in the PCE price index still showed annualized price increases above 3%.

Warsh stated, “We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.” He did not signal a specific decision but emphasized the Fed’s responsibility for sustained inflation.

Following the speech, Bitcoin briefly dropped 3%, and bond yields rose. The 10-year Treasury yield climbed to 4.73% from 4.67%, while the 30-year yield increased to 5.22% from 5.19%.

Bitcoin’s strong August performance

Bitcoin is on track for its largest monthly gain since November 2024, rising 24.5% in August to $78,317 from $62,892 at the start of the month. However, it remains 37.9% below its all-time high of $126,080 set in October 2025.

Other major cryptocurrencies performed even better over the same period, with Solana up 38.9%, Ether up 28.6%, and Zcash up 77.4%.

Geopolitical tensions and market reactions

Over the weekend, Iran reported a U.S. strike on Larak Island in the Strait of Hormuz, which it said killed and wounded Iranian servicemen. Iran claimed it responded by striking U.S. military bases in Jordan. The U.S. Central Command has not issued a statement on the incident.

Oil prices rose on the news, with Brent crude climbing 2.7% to $90.48 per barrel. Gold prices fell, dropping below $4,450 per ounce, while U.S. equities opened lower.

What is still unclear

It remains uncertain whether the Fed will actually raise rates in September. August CPI data, set for release on September 11, could influence the decision. Some analysts, like deVere Group CEO Nigel Green, argue that the market may be overreacting to Warsh’s speech, noting that a weakening labor market could discourage a rate hike.

Sources

• The Defiant