Interest-rate traders now put the Fed rate hike odds for 9 December at 79.3%, according to CME FedWatch, on the day the US government reported faster growth and prices still rising 3.6% a year.
Bitcoin traded near $81,400 on Binance at 16:00 UTC on Thursday. It had touched $79,710 at 02:00 UTC, about ten hours before the data came out at 12:30 UTC, and rose in the hours after.
What the US data says about Fed rate hike odds
The Bureau of Economic Analysis (BEA) said the US economy grew at an annual rate of 3.4% in the third quarter, up from 2.2% in the second. Investment, consumer spending and government spending all added to it.
Prices are the harder part. In its September report, BEA put the PCE price index, the inflation gauge behind the Fed’s 2% goal, 3.6% above a year earlier. Leave out food and energy and it is 3.1%. Over the month, prices rose 0.5%, and 0.3% without food and energy.
People got less for their money. Income left after taxes and adjusted for prices fell 0.3% in September, and spending, once price rises are taken out, was flat.
How Fed rate hike odds are priced for December
On Wednesday the Fed left its target range at 3.75% to 4%, by a 10 to 2 vote. Lisa Cook and Beth Hammack wanted a quarter-point increase. The statement said activity is “expanding at a strong pace” and inflation “remains elevated.” We covered that decision on Wednesday.
Thursday’s figures match that wording. For the 9 December meeting, the Fed rate hike odds on CME FedWatch show a 79.3% chance of a move to 4% to 4.25% and 20.7% for no change. It gives no chance of a cut. The tool turns prices in Fed funds futures into rate odds, so the figure moves all day.
Why should a Bitcoin holder care? Coins pay nothing and cash pays something, so every Fed rise widens the gap.
Where Bitcoin trades against its key levels
Look at the daily chart and Bitcoin is stuck right under its 50-day average, about $82,006. That line is just the average of the last 50 daily closes. Every close since 22 October has finished beneath it.
The floor is $79,221, the low from 24 October. Thursday’s dip to $79,710 stopped above it. A daily close under that mark would put Bitcoin lower than at any point since 18 September, when it traded as low as $76,296. A close above the average would put $84,898, the 21 October high, back on the table. Momentum, measured by the 14-day RSI on a 0 to 100 scale, sits at 48.
Odds are not decisions, and they can change before then. BEA publishes October’s prices on 25 November, two weeks before the vote.
