Bitcoin falls to $64,000 as jobless claims lift Fed hike odds

Fed rate-hike expectations jumped from below 50 percent to 73 percent in a week, and Bitcoin is absorbing the pressure.

Bitcoin fell 0.7 percent to $64,384 after US jobless claims came in below forecasts, lifting Fed rate-hike bets.

Fed Chair Kevin Warsh said after the July 29 meeting that he "asked for a proper family fight, and got one," as three policymakers dissented in favor of an immediate 25-basis-point hike.

Seasonally adjusted initial claims hit 199,000 for the week ending Aug. 1, below the 204,000 economists expected, the US Department of Labor said. The four-week moving average fell to 198,750. CME FedWatch data shows traders now price a 73 percent chance of a quarter-point hike at the Sept. 15-16 FOMC meeting, up from below 50 percent a week earlier.

The next test for Bitcoin is the Aug. 12 CPI report, which will show whether June's 3.5 percent year-over-year inflation reading held as WTI crude rose about 20 percent in July. A hotter print could push hike odds higher and drive BTC below the $64,000 support toward $62,400; a cooler one could revive a push above $65,000.

Oil Prices Drive the Repricing

The jump in hike odds traces to the Strait of Hormuz. WTI crude futures rose about 20 percent in July as Iran-US tensions escalated, and energy is the most direct pass-through component in the PCE gauge the Fed watches. The July 29 vote split 9-3, with Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan dissenting. The dot plot shows nine of 18 officials now expect at least one hike this year, versus a March median that still pointed to cuts.

What a Hike Means for Crypto

Bitcoin has traded as a liquidity-sensitive risk asset rather than a safe haven this year, with gold and silver posting double-digit gains while BTC slipped below $64,000. A September hike would raise the opportunity cost of holding non-yielding assets and push capital toward money-market funds. But the impact is not linear: in 2023, Bitcoin rose 21 percent against the trend even as the Fed hiked twice, because the path was fully priced in. If markets read a September move as the end of the tightening cycle, the drawdown could be brief.

Crypto-linked equities move more sharply. Coinbase, Circle and Strategy typically react more violently to rate expectations than spot Bitcoin, and the S&P 500's high-weight tech names have already pulled back. Combined capex across Google, Microsoft, Meta and Amazon approaches $750 billion, and rising financing costs would compress the marginal return on that spending.

Bitcoin is holding above the $64,000 support as of 14:30 UTC on Aug. 6, with resistance at $65,000. A break below support could trigger further selling; a recovery above $65,000 would settle the bulls.

This article is for informational purposes only and does not constitute investment advice.