Fed hike odds hit 92.7% as Trump says oil will drop like a rock

Bitcoin added about 3% to reach $79,000, which means it started Monday near $76,700 ^[1][2]. The 50-week exponential moving average sits at $77,430, and bitcoin had closed the weekly candle below that line on Sunday before getting back above it during the session ^[16]. So the whole reclaim of a level Cointelegraph describes as a key support target for a bull-market comeback happened inside one day's 3% ^[17][19].

The catalyst was two posts. "The failing Nation of Iran wants to make a deal, quickly and badly. I will determine whether or not the U.S.A. will choose to engage - The concept of which we are open to," Trump wrote on Truth Social ^[3]. Then came the price forecast. "With the temporary exception of Oil, prices are coming down sharply," he wrote, "and Oil will drop like a rock as soon as the Military Conflict with Iran is over, and that will not be long" ^[4]. The dip that followed left WTI above $100 a barrel and Brent at $105 ^[6].

The rate market moved more, and over a longer window. CME Group's FedWatch tool put the odds of a quarter-point hike at 92.7% against 59.4% a week earlier, 33.3 points in seven days, into a Wednesday decision that would take the target range to 3.75-4% from 3.5-3.75% ^{[9][18][10][20]}.

QCP Capital links the oil price to Fed policy. "A prolonged disruption would increase the risk of higher energy costs feeding into transport and logistics pricing, potentially lifting inflation expectations and constraining the Fed's ability to pause tightening even as growth slows," the trading firm wrote on Monday ^[11]. It added: "This dynamic creates policy tension: continued energy prices could keep the Fed restrictive, while economic data weakness from higher energy costs could argue for patience" ^[12].

For Wednesday the two trades coexist, because the hike is already paid for: QCP argued that risk assets had priced the 0.25% move and expects less volatility as a result ^[13]. "This containment reflects a shift in focus," it wrote: "the binary question of whether the Fed will hike has been answered; the critical issue for positioning is now how policymakers frame the move and what it signals about the path ahead" ^[14]. Past Wednesday they pull apart. In my view the bitcoin bid is the weaker of the two. It is long a peace deal with no date on it, while the 92.7% is long an oil price that is still on the screen at $105 Brent ^[6].

Equities followed neither. The S&P 500 gave back an early gain to trade 0.3% lower, with the Strait of Hormuz, Saudi Arabia's East-West pipeline and the Bab El-Mandeb Strait under threat as the conflict expanded beyond Iran ^[7][8]. If crude falls hard this week and the hike odds hold above 90%, the hike was driven by something other than oil. QCP argued that the muted response to last week's CPI data means Fed officials' language now matters more than the decision itself ^[15].