Markets are divided on whether the Federal Reserve will raise interest rates or hold on hold on Wednesday, but analysts say bitcoin may be less vulnerable than AI-driven tech stocks.
Bitcoin recovered from its intraday losses to trade just below $64,000 on Tuesday, while AI-linked technology stocks stumbled again ahead of one of the most uncertain Fed meetings in years.
Markets are currently pricing in a 70% chance of the Fed leaving rates unchanged on Wednesday and a 30% chance of a surprise 25 basis point hike, CME FedWatch data show. The split reflects chairman Kevin Warsh’s reduced use of forward guidance, leaving investors with less clarity about the central bank’s next move, according to derivatives research firm Block Scholes.
“Tomorrow’s FOMC meeting, Kevin Warsh’s second as Fed chairman, is one of the most uncertain in years,” said Thahbib Rahman, research analyst at Block Scholes. Looking at each Fed meeting since 2015, he noted that only two have seen markets more divided over the outcome.
Signs of disengagement
Even with the uncertainty hanging over the markets, bitcoin has largely held its ground in July as chipmakers and other AI favorites have come under pressure, raising the possibility that crypto will begin to diverge, at least at the margin, from traditional risk assets.
