Citigroup now expects the Federal Reserve's first rate cut in June 2027, scrapping earlier calls for cuts starting in October 2026, after August payrolls beat forecasts. Bitcoin fell below $80,000 on the jobs data and again below $76,000 ahead of the Fed's September hike, but has since recovered above $86,000.
Citigroup pushed back its forecast for the Fed's first rate cut to June 2027, replacing calls for reductions in October and December 2026 and January 2027 with three cuts in June, September and December 2027. The bank made the shift after US employers added 162,000 jobs in August, well above the 53,000 economists expected.
Strong jobs data changed Fed expectations and hit Bitcoin
The unemployment rate held at 4.1%, and the labor force participation rate rose 0.2 percentage point. Earlier prints were revised higher too: July payrolls changed to a gain of 21,000 from a previously reported loss of 23,000, while June was raised by 11,000. Citi economists Andrew Hollenhorst and Veronica Clark wrote: "The unemployment rate was unchanged and labor force participation rebounded noticeably."
Bitcoin fell below $80,000 following the August employment data, reversing from an intraday high near $81,370. Rate futures placed a 61% probability on a Fed hike at the September meeting, up from 52% before the jobs report. The Fed then delivered that increase, raising the benchmark rate by 25 basis points on Sept. 16 to a target range of 3.75% to 4%, its first hike since July 2023.
Higher rates remain a pressure point, but Bitcoin has recovered
Inflation has stayed above the Fed's 2% target for more than five years, keeping the door open to further tightening. Ahead of the September meeting, the global crypto market lost more than 2% as hike odds moved above 92%, and Bitcoin fell below $76,000.
Bitcoin briefly moved toward $75,000 after the Sept. 16 decision but then climbed above $86,000 as ETF demand returned, Treasury yields eased and short sellers closed bearish positions. It touched $87,000 this week, its highest level since late January, while US spot Bitcoin ETFs recorded $433 million in net inflows on Sept. 18.
BitGo Research chief Greg Cipolaro pointed to Bitcoin's recovery after both the Fed decision and the failed Senate cloture vote on the CLARITY Act as evidence the asset absorbed the hike better than might have been expected. That reading remains a market view rather than proof Bitcoin has decoupled from monetary policy, since the rebound coincided with several developments at once. Citi's new timeline now places the first cut roughly nine months after the September hike, with policymakers signaling one more increase remains possible before year end.
Source: crypto.news
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