Goldman Sachs states that a Fed rate hike in September is highly unlikely. Goldman Sachs Chief Economist Jan Hatzius released a note to clients based on a series of weakening economic data, from retail sales figures and unemployment rates to a slowing inflation rate.
Hatzius believes current market expectations are misplaced. “We still think market pricing for the funds rate is too hawkish,” he wrote. He expects the Fed’s first step will not be taken until December and projects that inflation will rise again in early 2027. This calculation aligns with the view of Adam Posen from the Peterson Institute, who sees only a 25% chance of a rate hike next month. Exchange data from CME FedWatch also shows that the probability of a 25 basis point hike to the 3.75%-4% range currently stands at just 30.6%, while the majority of market participants expect it to remain unchanged.
Institutional Flows Pivot to Buying
Expectations of a rate pause coincide with the weakening of the U.S. currency. The Dollar Index (DXY) fell to the 99.29 level - its lowest point since June 5, while breaking the bullish trendline to the downside. The weakening of the dollar has a proven historical track record of benefiting Bitcoin and other risk assets.
Large capital immediately moved in response to this macro direction. U.S. spot ETFs absorbed over 14,000 BTC within five days until August 7 - the strongest accumulation pace since last May. This figure marks a fundamental shift in institutional capital behavior. After recording outflows of up to 110,000 BTC in the second half of the second quarter, the third-quarter trading cycle has now reversed, posting net inflows of around 11,000 BTC.
Liquidation Traps Amid a Quiet Market
Although exchange-traded investment instruments are absorbing fresh funds, Bitcoin price movement in the spot market remains dormant. The asset is trading around $63,299, firmly held within a narrow range since the beginning of July. Daily transactions are practically running extra slow - spot trading volume plunged to a two-and-a-half-year low, perpetual volume dropped to its quietest level in three years, and volatility levels settled near multi-year lows.
Behind the seemingly frozen trading scenes, futures bets continue to pile up. Perpetual open interest has constantly remained above the 300,000 BTC level throughout this summer. The combination of thin regular market liquidity and a massive stack of open derivative contract positions has the potential to trap traders in a series of sharp forced liquidations - whether exploding to the upside or swept to the downside. Reported by CoinDesk.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
