Summary
- Bitcoin has held steady above $63,000 and is up about 6% for the month even as AI-linked tech and semiconductor stocks have slumped.
- Traders are split ahead of Wednesdays Federal Reserve decision, with markets pricing roughly a 30 percent chance of a rate hike.
- Analysts say bitcoins correlation with equities has weakened, suggesting this weeks Fed meeting may have a smaller impact on the cryptocurrency than on traditional risk assets.
Markets are split on whether the Federal Reserve will hike rates or stay on hold on Wednesday, but analysts say bitcoin may be less vulnerable than AI-driven tech stocks.
Bitcoin recovered from its intra-day losses to trade flat 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 currently price a 70% probability that the Fed leaves rates unchanged on Wednesday and a 30% chance of a surprise 25-basis-point hike, CME FedWatch data shows. The split reflects Chair Kevin Warsh's reduced use of forward guidance, leaving investors with less clarity on the central bank's next move, according to derivatives analytics firm Block Scholes.
Traders are unusually split ahead of Fed decision (CME FedWatch)
“Tomorrow's FOMC meeting, Kevin Warsh's second as chairman of the Fed, is one of the most uncertain in years,” said Thahbib Rahman, research analyst at Block Scholes. Looking at every Fed meeting since 2015, he noted that only two have seen markets more divided over the outcome.
Signs of decoupling
Even with that uncertainty hanging over markets, bitcoin has largely held its ground in July while chipmakers and other AI favorites have come under pressure, raising the possibility that crypto is beginning to diverge, at least at the margin, from traditional risk assets.