Fed Hike Odds Keep Pressure on Crypto as Bitcoin Dips Below $79K, Zcash Tumbles

Bitcoin and other major cryptocurrencies came under renewed pressure Tuesday as traders adjusted their expectations for U.S. monetary policy. Most large-cap tokens remained higher on a weekly basis, but the market is increasingly pricing in a roughly 60% chance that the Federal Reserve will raise rates next week.

Bitcoin fell more than 1% to just below $78,800, according to CoinDesk data. The decline left BTC with only a slight seven-day gain.

The $80,000 level continues to prove difficult for Bitcoin. The asset has gone about two weeks without recording a daily close above that mark, although it has so far managed to retain most of the gains accumulated during August.

Zcash posted the largest decline among major cryptocurrencies, sliding almost 5% to approximately $1,125. Despite the setback, Zcash remains up around 33% over the past week, the biggest seven-day increase among large-cap tokens. Hyperliquid’s HYPE fell more than 3% to about $84, while Solana declined over 2% to slightly above $103. Both cryptocurrencies have now erased their weekly gains.

Ether declined roughly 1% to below $2,482, and XRP slipped to around $1.39. Tron was nearly unchanged near $0.33. Dogecoin and BNB were among the better-performing major tokens, each losing only a fraction of a percent while preserving weekly gains of nearly 9% and more than 7%, respectively.

Bond markets are adding to the pressure on digital assets. The 10-year Treasury yield remained close to 4.8% after August payroll data showed 162,000 jobs were added, well above the approximately 53,000 economists had expected. The stronger labor-market figure has sharply changed rate expectations, with traders now seeing about a 60% probability of a quarter-point Fed increase at next week’s meeting. Such a move had been viewed as extremely unlikely earlier in the year.

The dollar index edged below 99 for a second straight session as investors positioned for possible monetary tightening by the Bank of Japan. Gold continued its advance, moving above $4,430.

Despite the challenging macroeconomic backdrop, crypto markets have not suffered significant technical deterioration, according to Joel Kruger, a market strategist at LMAX Group.

Oil prices provided another inflationary concern. Brent crude remained above $97 a barrel, reaching a six-week high after Iran said an agreement with Oman concerning shipping through the Strait of Hormuz was nearing completion. The announcement followed a weekend of U.S. and Iranian strikes involving vessels and military targets. Sustained strength in crude prices could keep inflation pressures elevated ahead of Friday’s consumer-price data.

Asian stocks delivered mixed results at the start of the week. South Korea’s Kospi surged nearly 5% to its highest level since late July, while Japan’s Nikkei advanced more than 2% on demand for AI-related memory-chip stocks. Hong Kong’s Hang Seng moved lower, falling almost 1%.

Options-market sentiment has also improved. Yusuf Fakhro, a partner at ARP Digital, said the persistent fear that characterized the previous bear market has largely faded. He also highlighted a shift among long-term holders, who became net buyers in late August for the first time during the current market move.

Attention now turns to Thursday’s producer-price index and Friday’s consumer-price index. These will be the final major inflation readings before the Fed’s policy meeting. If core CPI comes in hotter than expected, the probability of a rate hike could rise toward two-thirds, potentially putting Bitcoin’s $77,000 support zone under significant pressure.