'Anything remotely dovish' from Fed could be good for bitcoin, says analyst
Bitcoin is showing signs of decoupling from traditional risk assets like AI-linked tech stocks ahead of a highly uncertain Federal Reserve meeting. Analysts suggest that the market's divided expectations regarding interest rate changes may limit the impact of the FOMC meeting on crypto prices.
Why it matters
This potential divergence suggests a shift in investor sentiment where cryptocurrency may be viewed differently than traditional tech-heavy growth assets during periods of economic uncertainty.
Bitcoin BTC $ 63,843.78 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.
"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.
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