BofA Projects Three Fed Rate Hikes in 2026, Crypto Risk Rises

Bank of America (BofA) now expects the Federal Reserve to raise interest rates three times in 2026, a hawkish pivot that puts additional pressure on risk assets like Bitcoin.

The bank projected a 25-basis-point hike in September, another in October, and a third in December, bringing the federal funds rate to a range of 4.25% to 4.50%. That would mean 75 basis points of tightening for the year. BofA analysts wrote in a note Monday that “the June Summary of Projections and Warsh’s comments indicate that the Fed’s reaction function is much more hawkish than we thought.”

Deutsche Bank also raised its outlook, forecasting two quarter-point hikes in 2026, one in September and another in December. LSEG data show markets are pricing about 41.2 basis points of tightening for the full year.

The shift followed the Federal Reserve’s June FOMC meeting, where policymakers held rates steady but nearly half of the committee signaled they expected to raise rates before year-end. After that meeting, Bitcoin dropped to around $62,000, CoinGecko data show.

In past tightening cycles, higher rates have tended to reduce liquidity in crypto markets and make yield-bearing assets like Treasuries more attractive relative to tokens, AlphaScala's crypto market analysis notes. Bitcoin is currently consolidating in the $64,000-$65,000 range, largely unchanged after the U.S. and Iran reached a preliminary deal last week.

The next major data point is Friday’s PCE inflation report, which will help set expectations for the September meeting. A hotter-than-expected print might reinforce the hawkish case, while a soft reading could ease the urgency, according to a Reuters report citing Deutsche Bank.

For more on the largest digital asset, see the Bitcoin (BTC) profile.