The probability of a Federal Reserve interest rate cut in June has collapsed to just 1.35%, according to Polymarket data, as persistent inflation and steady labor markets force a rethink of monetary easing. Market participants now overwhelmingly expect rates to remain unchanged, a stark shift from earlier in the year when multiple 2026 cuts were priced in. CME-linked trackers even briefly showed rate hike odds approaching cut probabilities this spring, underscoring the hawkish repricing.
Grayscale’s Head of Research, Zach Pandl, warned that the high-interest-rate environment could restrain Bitcoin’s upside. In a newly released assessment, he noted that rising consumer inflation—approaching 4%—has left the new Fed Chair Kevin Warsh with limited room to maneuver. Markets are now postponing the first cut until September 2027, a timeline that would keep dollar-denominated interest-bearing assets more attractive than non-yielding hedges like Bitcoin and gold. Pandl highlighted that every 25-basis-point increase in short-term rates could add approximately $190 million to Circle’s revenue, as stablecoin issuers benefit from retaining reserve yields under the GENIUS Act.
Technical analysis shows Bitcoin holding above the 100-period SMA at $79,693, preserving the broader uptrend from the late-March low near $66,000–$68,000. However, bearish divergences in the RSI during May and an RSI reading of 46 suggest momentum has waned. If the Fed surprises with a 25-bps cut, ChatGPT’s prediction model sees Bitcoin quickly rebounding to $83,000–$86,000. Without such a catalyst, BTC is likely to stay rangebound between $79,000 and $82,500. A break below the $79,000 support could shift focus to the $77,000–$78,000 zone.
Grayscale retains a constructive long-term view, arguing that progress on crypto regulation—such as the Clarity Act—could offset interest-rate headwinds. Meanwhile, the high-rate environment may accelerate tokenization of fixed-income assets, with short-term corporate bond yields already outpacing DeFi lending rates on platforms like Aave. The firm believes that while Bitcoin faces immediate pressure, the structural case for digital assets remains intact as regulatory clarity evolves.
