Bitcoin price eyes $74K as Fed rate-hike bets hit 96% after Waller speech

Bitcoin (BTC) fell toward $74,000, and US stock futures dropped on Tuesday as a senior Federal Reserve official voiced support for hiking interest rates.

Bitcoin traded 1.3% lower on Tuesday, reaching $74,080 as Nasdaq futures fell 0.4% ahead of the Wall Street open.

October US CPI data, due for release at 8.30am on Tuesday, is expected to show a monthly increase of 0.3%, less than September’s 0.6% gain.

Federal Reserve governor Christopher Waller said that he would “support” a 0.25% interest-rate hike at the Dec. 9 FOMC meeting regardless of Tuesday’s CPI reading.

Data from TradingView showed BTC/USD reaching $74,080 on Bitstamp, down 1.3% on the day.

US stock market futures leaned lower as Fed governor Christopher Waller said that he would support hiking interest rates by 25 basis points at the next meeting of the Federal Open Market Committee (FOMC) on Dec. 9. At the time of writing, Nasdaq 100 futures were down 0.4%.

His decision, he added, would not be swayed by lower-than-expected inflation data. The October prints of the US Consumer Price Index (CPI) is due for release at 8.30 am Eastern time on Tuesday. It is expected to show a month-on-month increase of 0.3% versus September when the increase was 0.6%, pushed higher by rising fuel costs.

“While I am hoping for an improvement over September, even if this occurs, I would still support a 25 basis point increase in the FOMC’s policy rate at our December meeting,” Waller commented in a speech at the Bank of England Watchers Conference in London.

“However, if inflation comes in substantially higher than I expect, more robust action by the FOMC may be called for.”

While CPI is particularly sensitive to fuel-price volatility, Waller also flagged high readings from the Personal Consumption Expenditures (PCE) index, known to be the Fed’s “preferred” inflation gauge and which he confirmed was the “measure targeted by the FOMC.”

“Let’s just say it. September’s inflation data were bad. There was no silver lining,” he said, referring to PCE rising 0.5% month-on-month and 3.7% year-on-year, respectively.

Following the speech, markets immediately repriced odds of a 25-basis-point hike in December from 76.3% to 96.3%, per data from CME Group’s FedWatch Tool.

Financial policy tightening measures traditionally act as headwinds for crypto and risk asset prices as they imply a reduction in liquidity and associated capital inflows.

Commenting on the impetus for the expected slowdown in CPI upside for October, Christopher Hodge, chief US economist at Natixis CIB Americas, pointed to price declines in both fuel and shelter.

“We think the slowdown in core CPI will stem from a reversion of shelter prices, primarily owners’ equivalent rents and lodging away from home. Similarly, the stabilization in diesel prices should help to quell price pressures in energy-intensive goods,” he wrote, quoted by CNBC.