The Federal Reserve announces its rate decision at 2 p.m. ET on Wednesday, and CME fed funds futures still assign roughly a 35% probability to an increase. Rising Treasury yields and a nearly 20% climb in WTI crude this month leave the central bank little room for dovish talk. Bitcoin last traded 1.7% higher at $64,566.5 ahead of the announcement.
Traders head into Wednesday's Federal Reserve meeting without a settled expectation. CME fed funds futures still assign roughly a 35% probability to a rate increase, a level of indecision that is rare so close to a decision, and by this point traders have usually converged on a clear call of hold, hike or cut.
The central bank publishes its decision at 2 p.m. ET, followed by Chair Kevin Warsh's press conference at 2:30 p.m. ET. This gathering carries neither updated economic projections nor a dot plot of interest-rate forecasts, the features that traders typically weight most heavily. Yet the outcome still carries outsized importance.
Citadel is betting on an increase
Citadel, one of the largest hedge funds in the world, is predicting an increase. The firm argues that such a move would end forward guidance as a policy choice, an outcome Warsh has long favored.
Rising yields and costlier oil narrow the Fed's options
Both the 10-year and two-year Treasury yields have broken above key trendlines that defined the shallow pullback in place since 2023. With that breakout complete, the upside now offers the path of least resistance.
Oil adds a second constraint. WTI crude prices have climbed nearly 20% this month while peace talks between the U.S. and Iran remain deadlocked. That combination points to the potential for a renewed increase in inflation, following June's relief, which was largely tied to the earlier oil-price selloff.
Bitcoin holds above $64,000
Should the Fed raise rates or sound hawkish, the already buoyant bond yields could rise sharply, potentially creating a headwind for risk assets including cryptocurrencies. A sharp rise in crypto prices may instead emerge if the central bank downplays inflation fears despite resurgent oil prices.
Bitcoin ticked higher on Wednesday, last trading 1.7% higher at $64,566.5 by 07:15 ET. The cryptocurrency had slid below $63,000 in the previous session, tracking an AI-led global stock rout.
Over the past year, bitcoin has increasingly traded in line with broader risk assets, yet its losses have been more contained than those seen in semiconductor and artificial intelligence shares this week. crypto.news places the immediate resistance zone at $65,000–$65,200.
More than $500 million reportedly left US spot bitcoin ETFs during a 4-day run of outflows, removing a source of spot demand that had supported the previous advance.
Sources: CoinDesk, crypto.news, Investing.com
Trading involves risk.
Risk Disclaimer
