UBS’s new forecast of two Federal Reserve rate hikes this year extends Bitcoin’s potential macro headwind through December. The issue reaches beyond September’s decision: investors may have to weigh the cost of holding a non-yielding asset against interest-bearing alternatives through the end of 2026.
Reuters reported Sept. 7 that UBS Global Wealth Management now expects increases of 25 basis points, or a quarter of a percentage point, in both September and December. It had previously expected no policy change this year. UBS cited strong August labor data, hawkish Fed communication and inflation risks from supply bottlenecks.
Markets are already moving toward that view. Futures price in a roughly 58% chance of a quarter-point hike at the Sept. 15–16 meeting, up from 52% before the jobs report.
For Bitcoin, the risk is that higher rate expectations keep Treasury yields supported, preserve the appeal of dollar assets and make investors less willing to take risk.
Strong jobs give inflation more weight
The Bureau of Labor Statistics reported that employers added 162,000 jobs in August and unemployment held at 4.1%. Hiring exceeded the average monthly gain of 31,000 over the preceding 12 months.
But the strength was uneven. Food services and drinking places added 59,000 jobs, while local government education added 42,000. Information employment fell by 23,000.
Even so, labor-market resilience changes the Fed’s policy tradeoff. A deteriorating jobs market can increase pressure to ease. When hiring holds up, policymakers have more room to focus on inflation and maintain restrictive conditions.
Governor Christopher Waller described that balance in Sept. 3 remarks, before the jobs release. He said continued progress on inflation could justify holding rates steady, while hot August inflation could make him consider a hike.
The jobs report therefore strengthens the labor side of the argument for tighter policy, leaving inflation as the next major variable for September.
UBS’s forecast also extends the possible tightening horizon beyond the next meeting. Markets respond not only to the next Fed decision but to the expected path of rates across several meetings.
The Fed’s explanation of monetary transmission describes how policy expectations influence longer-term interest rates, asset prices and exchange rates. Financing conditions can tighten before policymakers deliver an increase.
Applied to UBS’s outlook, the risk for Bitcoin is that those conditions remain restrictive through year-end. Higher expected US rates can keep yields elevated and make dollar-denominated interest-bearing assets more attractive.
The December call also raises the stakes of the September meeting. Investors will be assessing both the immediate decision and what the Fed says about conditions that could warrant another increase.
How that pressure can reach Bitcoin
Bitcoin pays no contractual interest. When investors can earn more from relatively safe interest-bearing assets, holding it carries a higher opportunity cost. That can raise the threshold for taking price risk even when an investor’s longer-term view of Bitcoin has not changed.
Higher borrowing costs provide another channel. More expensive financing can make leveraged positions harder to maintain, while tighter financial conditions can reduce investors’ willingness to deploy fresh capital into risk assets.
Historical research supports taking this seriously. A 2023 IMF working paper found that Fed tightening reduced a common crypto price factor through weaker risk-taking. That historical relationship helps explain Bitcoin’s exposure to monetary conditions, while leaving the size of any response in 2026 uncertain.
For scale, Bitcoin traded around $79,375 according to CryptoSlate data around 14:02 UTC on Sept. 7.
CryptoSlate’s Sept. 5 analysis of the jobs report examined the immediate pressure and the coming inflation test. UBS adds a longer horizon: its December call raises the possibility that restrictive conditions persist through year-end.
Bitcoin’s response depends on both expectations and demand. If investors have already priced in higher rates, confirmation may carry less surprise, while crypto-specific demand could offset some of the macro pressure.
The next scheduled test is August CPI on Sept. 11, ahead of the Sept. 15–16 FOMC meeting. Cooler inflation would fit Waller’s stated condition for supporting a hold. A hotter reading would strengthen the argument that price pressures require more restraint while employment remains resilient.
The Fed’s communications blackout began Sept. 5 and runs through Sept. 17, limiting new policy commentary before the meeting. Inflation data are therefore the immediate signal; the committee’s decision and projections will provide the next major indication of how firmly policymakers see a need for further restraint.
Beyond September, the December meeting is scheduled for Dec. 8–9. UBS expects another hike then, but the inflation and employment picture could change substantially before that decision.
For Bitcoin, the key question is whether incoming inflation data push expected rates higher and whether yields and broader financial conditions follow. Cooler inflation or a less hawkish Fed assessment could ease the pressure. Persistent inflation would give UBS’s two-hike outlook more weight, leaving Bitcoin to contend with a less supportive macro backdrop.