Traders See Four Fed Rate Hikes by June 2027 as Bitcoin Falls Below $83K

The market is increasingly pricing in four additional Fed rate hikes, while rising Treasury yields and a stronger dollar continue to pressure bitcoin and gold.

U.S. Treasury yields are climbing across the curve as traders brace for an extended period of tighter monetary policy. CME FedWatch now indicates that a federal funds target range of 4.75% to 5% is the most likely outcome by June 2027.

Reaching that range would require four 25-basis-point increases from the current 3.75% to 4% level. The Federal Reserve has already delivered a 25-bps rate hike this month.

Selling pressure is evident across the Treasury market. The 20-year yield is nearing 5.5%, pushing the long-duration Treasury ETF TLT to record lows below $80. The 10-year yield has moved above 5.1%, a level last reached in 2007. Bond yields are also rising internationally, with government debt markets in France, Germany, the U.K. and Japan facing similar pressure.

Higher borrowing costs and a stronger dollar are creating headwinds for risk assets. The dollar index has moved above 101 and is up 3% this year. Bitcoin has slipped below $83,000 from its recent high of $87,500, while gold is holding just above $4,200, down 25% from its January record high.

Several developments are contributing to the rise in Treasury yields. The U.S. economy remains resilient, with the S&P Global composite PMI, which tracks manufacturing and services activity, beating expectations in September and climbing nearly 4.3% to 58.4.

Renewed tensions in the Middle East have also clouded the inflation outlook, helping push oil and diesel prices higher.

At the same time, heavy borrowing to finance AI infrastructure is increasing the supply of bonds competing for investor capital. Stronger economic growth, renewed inflation risks and rising demand for funding are collectively adding upward pressure to Treasury yields.

The Japanese yen has also weakened against the U.S. dollar, with the exchange rate returning to around 159 yen per dollar. That move reverses much of the yen’s recovery toward 153 following reports of U.S. and Japanese intervention last month.

The key question now is whether expectations for additional Federal Reserve rate increases will continue driving Treasury yields and the dollar higher.