Bitcoin traders brace for volatility as the CLARITY Act awaits a Senate vote to move forward and the Fed is due to announce its latest rate decision.
Bitcoin (BTC) is starting the third week of September below key weekly support levels as traders eye volatility cues.
The Federal Reserve takes the spotlight for risk-asset traders this week as Wednesday’s decision on interest rates dictates the mood.
On the back of high inflation and cautious words from chair Kevin Warsh, the Fed is widely expected to hike benchmark rates by 25 basis points to 3.75-4% despite several dissenting officials in favor of holding them at current levels. The setup echoes that of the Fed’s July rate decision, when Warsh held rates while several voices argued for a hike. Now, Warsh faces pressure from US president Donald Trump not only to avoid a hike but to enact rate cuts.
The latest data from the CME Group’s FedWatch Tool puts the odds of rates staying at their current levels at just 13.3% at the time of writing. A week ago, the implied probability of a rate pause was above 40%, but it pulled back in the face of recent inflation data and oil-price gains from escalation in the Middle East.
Fed target rate probability comparison for September FOMC meeting (screenshot). Source: CME Group
While the August print of the Consumer Price Index (CPI) and Producer Price Index (PPI) both avoided major upside surprises, markets reacted hawkishly as oil prices returned above $100 per barrel with no end to the supply crisis in sight.
CFDs on WTI crude oil one-day chart. Source: Cointelegraph/TradingView
Commenting, trading resource The Kobeissi Letter warned of the severity of the resulting energy shock, as 30 million barrels per day will be unable to transit through the Strait of Hormuz or Saudi Arabia’s East-West pipeline, with the Bab el-Mandeb Strait now also at risk.
“Even after accounting for some overlap between these routes, the scale of the potential disruption is enormous relative to the ~100 million barrel per day global oil market,” it wrote in a post on X.
Kobeissi noted increasing inflation expectations among US consumers, who saw price increases hitting 4.6% over the coming year — 1.1% more than their outlook at the start of 2026 — with gas prices and trade tariffs frequently referenced.
US consumer inflation expectations data. Source: The Kobeissi Letter on X.com
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