Bitcoin’s New Fears: Rate Hikes, Bond Meltdown, and Why You Shouldn’t Trust the Fed

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Markets

What to know:

  • Markets are now seriously pricing in the odds of an imminent U.S. rate hike, a far cry from weeks ago, when the debate was about how many Fed rate cuts there would be in 2026.
  • Oil is up 50% since the Iran conflict began, pressuring inflation and growth.
  • The bond market selloff is global, with the U.K.’s 10-year gilt yield topping 5% for the first time since 2008.

Only weeks ago, the interest rate debate in the U.S. centered on just how many Federal Reserve rate cuts there would be in 2026. But as the economy shows only faint signs of slowing, inflation remains above the central bank’s 2% target, and oil prices are up 50% in three weeks, rate traders are beginning to contemplate a rate hike as soon as April.

According to CME FedWatch, the chances of the Fed tightening policy at its next meeting in April have risen to 12%. That’s up from 0% one week ago and an even sharper reversal from two months ago, when the conventional wisdom said a rate cut was likely that month.

The latest data has inflation continuing to run well above the Fed’s 2% target. And that was prior to the Iran war and subsequent 50% surge in oil prices.

The long end of the bond curve has sold off sharply alongside, with the 10-year U.S. Treasury note up another 10 basis points on Friday to 4.38% versus under 4% at the start of March.

The bond selloff is global. In the U.K., 10-year gilt yields have jumped above 5%, up 15% in the past month, and are at their highest since 2008.

Bitcoin ahead of the curve?

Bloomberg reports the S&P 500 is on track for a fourth straight weekly decline, now down around 5% since late February. The Nasdaq is down similarly, including a 1.2% drop on Friday.

“Bitcoin has once again acted as the canary in the macro coal mine,” said Andre Dragosch, European Head of Research at Bitwise, notes, “At current levels, bitcoin is already pricing a recession, while many traditional assets are not,” he added.

Bitcoin continues to hover around $70,000 and, aside from oil, remains one of the best-performing assets since the war began, while metals continue to show weakening price action, with gold down a further 2% on Friday.

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2026-03-20 17:52