Fed Rate Hike Nears Certainty; Bitcoin Braces for Impact

Interest rate futures indicate a 92.7% likelihood that the Federal Reserve will raise rates on Wednesday. This has left traders across crypto and stock markets concerned. Donald Trump appointed Kevin Warsh with a single pledge: to cut interest rates. But with inflation at 3.4%, Warsh cannot deliver on that promise.

So, what will the market's response be, and in which direction will Bitcoin move?

A Pause Represents the Closest Warsh Can Get to Fulfilling Trump's Wish

The Fed's target interest rate range is currently 3.50% to 3.75%. On Wednesday morning, the CME FedWatch tool showed a 7.3% probability of no change, with zero odds of a reduction.

Trump selected Warsh for the position and watched his swearing-in at the White House in May. Even before the ceremony, the president was already treating his incoming chair as an ally.

“You’re my Fed chair,” Trump told Kevin Warsh in November 2024 after he showed up at Mar-a-Lago to interview for Treasury secretary.

It took 14 months, a reality-TV-style audition, a Wall Street whisper campaign, and a criminal investigation of Jay Powell before it came true.…

— Nick Timiraos (@NickTimiraos) January 31, 2026

According to Wharton professor Jeremy Siegel, pressure from Trump and the midterm elections are the only forces still preventing a hike. White House economic adviser Christopher Phelan called a move this week a mistake. The midterms are seven weeks away.

In an interview this week, former Fed governor Stephen Miran made a data-driven case against raising rates.

“If you held in June and July and become more hawkish as the inflation data come down, it speaks to an incoherent reaction function,” he shared.

How Bitcoin and Gold Reacted to the Previous Data Shock

Interest rate expectations set the opportunity cost of holding assets that pay no yield. Bitcoin and gold both fall into that category, so lower rates generally support their prices.

The Bitcoin price held near $76,022 at the time of writing, down 1.17% in 24 hours. Gold was trading around $4,340 per ounce, up 1.4% on the day.

The August inflation report on September 11 demonstrated how quickly both react. Bitcoin dropped from roughly $77,100 to $76,050 within a minute. Gold slid from $4,353 to $4,292, then recovered.

BeInCrypto noted that hike odds were near 90% on that day. Since then, pricing has tightened to 92.7%.

KPMG chief economist Diane Swonk told the Associated Press that a hike now could pull long-term rates lower later. Traders are expected to focus on Warsh's press conference rather than the quarter-point adjustment itself.