Bitcoin (BTC) slipped below $77,000 on Friday after Federal Reserve Governor Christopher Waller signaled openness to future rate hikes. The shift pushed traders to price a quarter-point Fed hike as early as October.
The pioneer crypto has fallen roughly 4.5% over the past week as macro conditions deteriorate. Real yields have climbed and the dollar has firmed, eroding demand for non-yielding assets.
Fed Governor Waller Signals a Hawkish Pivot
Waller delivered the speech in Frankfurt under the title “Policy Risks Have Changed.” He backed holding rates steady near-term but warned that persistent inflation may force a different outcome.
His shift carries weight because Waller backed 75 basis points of cuts in late 2025. The easing supported a softening labor market and reflected his dovish lean. The pivot now reframes the Federal Reserve hike debate inside the FOMC.
“I can no longer rule out rate hikes further down the road if inflation does not abate soon, and that is especially true if measures of inflation expectations, some of which have risen lately, show signs of becoming unanchored,” he said.
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Traders Price October Fed Rate Hike
Rate-futures traders responded quickly, with the October 28 meeting now carrying roughly a 40% chance of a 25-basis-point hike.
A hold still leads the distribution at near 49%, but the forward curve has steepened hawkishly.
The shift aligns with PIMCO’s Fed hike warning tied to the Iran war and rising oil prices. Headline CPI rose 0.6% in April. Core PCE inflation has reached roughly 3.3% year-over-year.
Consumer sentiment adds to the strain. The University of Michigan index fell to 44.2, the record low reading for a series that began in 1952. One-year inflation expectations climbed to 4.8%.
If the Middle East conflict eases and oil retreats, the hawkish pricing could unwind. If energy prices stay sticky, the FOMC may have to respond.
That would leave Bitcoin exposed to tighter conditions and Wall Street inflation alarms through year-end.
