Bank of America Forecasts Three Fed Rate Hikes in 2026, Raising Concerns for Bitcoin and Crypto Markets

Bank of America (BofA) Global Research has significantly revised its outlook on U.S. monetary policy, predicting that the Federal Reserve will implement three interest rate hikes in 2026. The updated forecast aligns the bank with some of Wall Street’s most hawkish analysts and could create additional pressure on risk assets, including Bitcoin and the broader cryptocurrency market.

According to BofA’s latest projections, the Federal Reserve is expected to raise interest rates by 25 basis points at each of its September, October, and December meetings. If realized, the cumulative 75-basis-point increase would push the federal funds rate into the 4.25%–4.50% range by year-end. This marks a major shift from earlier expectations that the Fed would leave rates unchanged throughout 2026.

Deutsche Bank has also adopted a more aggressive stance, forecasting two 25-basis-point rate increases in September and December. These projections stand in contrast to the broader consensus among major financial institutions, many of which still expect borrowing costs to remain stable.

The change in outlook follows the Federal Reserve’s most recent Federal Open Market Committee (FOMC) meeting. While policymakers kept rates unchanged, several officials signaled support for future tightening measures to address persistent inflation and the resilience of the U.S. economy. The hawkish tone contributed to a decline in Bitcoin, which briefly fell to around $62,000.

BofA analysts noted that the Fed’s latest economic projections and recent comments from policymakers suggest a more aggressive approach to inflation management than previously anticipated. Meanwhile, Deutsche Bank highlighted the possibility of an earlier rate increase, although improving energy prices and moderating inflation expectations could reduce the urgency for immediate action.

Market data from LSEG indicates investors are currently pricing in approximately 41.2 basis points of monetary tightening for 2026.

Higher interest rates generally reduce market liquidity and increase the appeal of safer, yield-generating assets such as U.S. Treasury securities. As a result, cryptocurrencies and other risk-sensitive investments often face downward pressure during periods of monetary tightening.

Bitcoin is currently trading within the $64,000–$65,000 range despite positive geopolitical developments, including the recent U.S.-Iran agreement. However, additional Federal Reserve rate hikes could weaken investor sentiment and create further challenges for Bitcoin, Ethereum, and the wider crypto market throughout 2026.