Bitcoin fell as much as 3% to $62,913 before the Federal Reserve’s July decision, with futures markets assigning roughly a one-in-three probability to a quarter-point rate increase. Bank of America said the Fed has not raised rates since 1994 when markets priced an increase this lightly. What the decision signals about the rest of 2026 may matter more for Bitcoin than the move itself.
Bitcoin fell over the past 24 hours as traders positioned for a Federal Reserve decision that could break a market pattern dating back more than three decades. Data from CryptoSlate showed the largest cryptocurrency falling as much as 3% to $62,913, its lowest level in nearly two weeks, before recovering to $63,795 as of press time.
The weakness arrives before the Fed’s July policy meeting, only the second under Chairman Kevin Warsh. Policymakers have kept the benchmark rate at 3.50% to 3.75% since December, while President Donald Trump has repeatedly pressed them to lower borrowing costs.
Investors still largely expect no change Wednesday. Futures markets assign roughly a one-in-three probability to a quarter-point increase, creating the potential for a sharper repricing across risk assets.
Bank of America points to 1994 for the last hike priced this lightly
Bank of America said the bigger risk lies in how little of a potential hike markets have priced before Wednesday’s decision. The bank said the Fed has not raised rates since 1994 when markets had assigned less than a 60% probability to an increase beforehand. Futures currently embed only about 10 basis points of tightening, far short of the 25 basis points a standard hike would deliver.
Block Scholes put the probability of a hike at 33.7%, with only two Fed meetings since 2015 showing markets this closely divided so near a decision.
That history, however, may be a less reliable guide under Warsh. Jim Bianco, president of Bianco Research, argues that investors still approach the Fed through a framework built when chairs typically guided markets toward likely decisions.
Warsh has rejected conventional forward guidance in favor of responding to incoming data, and has said policymakers should have a “good family fight” over monetary policy before reaching decisions. Bianco said that shift makes a 35% to 40% probability of a hike reasonable despite the limited tightening reflected in futures.
Bitcoin’s 9% month complicates the selloff trade
Citadel Securities is positioned for the less expected result, forecasting a 25-basis-point increase and arguing that tightening would strengthen Warsh’s inflation-fighting credentials.
Bitcoin would enter any rate-driven repricing after showing signs of weaker marginal demand but comparatively strong price performance. US-listed spot Bitcoin exchange-traded funds recorded about $477 million of net outflows over the past three trading sessions, according to SoSoValue.
Yet the largest cryptocurrency has risen by roughly 9% this month. Block Scholes noted that the S&P 500 was broadly unchanged over the same period, while the firm’s basket of semiconductor and chip stocks had fallen almost 20%.
The divergence complicates the assumption that a Fed increase would automatically produce a sustained Bitcoin selloff. Bank of America estimates a July hike could push the tightening priced for 2026 from roughly 45 basis points to around 60 basis points.
That would turn Wednesday’s surprise from a single rate increase into a broader reassessment of how restrictive monetary policy could become this year.
Source: CryptoSlate
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