Goldman Sachs warns a hotter CPI could push the Fed back to a hawkish stance, jolting rate‑cut bets and pressuring Bitcoin and major altcoins.
- Goldman Sachs’ Kay Haigh says resilient growth will push the Fed’s focus back toward inflation risks, not just jobs data.
- A stronger‑than‑expected CPI on Friday could cut the odds of two rate cuts this year and reprice risk assets, from US stocks to BTC and ETH.
- Bitcoin, Ethereum, XRP and Solana already trade choppy as crypto markets function as a leveraged macro bet on the Fed’s reaction function.
Goldman Sachs Asset Management is warning that this week’s US inflation print could flip the Federal Reserve back toward a harder line, just as markets were starting to price in a smoother easing cycle.
Fed reaction function: jobs vs. inflation
Speaking after stronger‑than‑forecast non‑farm payrolls, analyst Kay Haigh said there are “some initial signs of a tightening labor market, but there is still a way to go before it is fully tightened.” In other words, employment is cooling at the margins, yet not nearly enough to remove the Fed’s inflation anxiety.
With growth still surprising to the upside, Haigh argues that “given the economy’s continued performance exceeding expectations, the FOMC’s focus will shift to the inflation situation.” Goldman Sachs’ base case still assumes “there is room for two more rate cuts by the Federal Reserve this year,” but Haigh adds a key caveat: if Friday’s CPI “unexpectedly rises, it may tilt the Federal Reserve towards a more hawkish stance.” For rate‑sensitive assets, that is the line that matters.
Macro risk and digital assets
The macro backdrop is already bleeding into crypto pricing. Bitcoin (BTC) is trading near $66,700, having slipped back below the psychologically important $67,000 zone after a run of liquidations. On crypto.news’ price board, Bitcoin (BTC) is quoted around $68,614, with a 24‑hour range between roughly $67,960 and $70,504 on about $44.2B in turnover.
Ethereum (ETH) changes hands close to $1,946, with a 24‑hour low near $1,943 and a high around $2,042, as roughly $17.4B in volume crosses the tape. XRP trades near $1.37, down about 4.3% on the day, after posting a 24‑hour high of $1.43 and a low of $1.36. Solana (SOL), another high‑beta proxy on liquidity conditions, is indicated around $81.52, lower by roughly 3.7% over the last 24 hours.
This choppy tape underlines Haigh’s point: digital assets remain a leveraged bet on the Fed’s reaction function. If CPI forces policymakers to re‑embrace a tougher stance, traders expecting a gentle glide path of “two more cuts” may find that risk assets, from US equities to BTC and ETH, have been positioned one step too far in front of the data.
