Bitcoin Could Rally If Fed Signals Softer Policy, Analyst Says

Traders remain divided over whether the Federal Reserve will raise interest rates or maintain its current policy stance on Wednesday, but analysts believe Bitcoin could be better positioned than AI-focused technology stocks.

Bitcoin recovered from earlier losses on Tuesday and traded nearly unchanged around the $64,000 level, while artificial intelligence-related technology stocks faced renewed pressure ahead of one of the most uncertain Fed meetings in recent years.

According to CME FedWatch data, markets are pricing in a 70% probability that the Fed keeps rates unchanged and a 30% chance of an unexpected 25-basis-point hike. The uncertainty reflects Fed Chair Kevin Warsh’s limited use of forward guidance, leaving investors with fewer signals about the central bank’s next move, according to derivatives analytics firm Block Scholes.

“Tomorrow’s FOMC meeting, Kevin Warsh’s second as Fed chair, is among the most uncertain meetings in years,” said Thahbib Rahman, a research analyst at Block Scholes. He noted that only two Fed meetings since 2015 have shown greater market disagreement over the outcome.

Bitcoin Shows Signs of Separating From Traditional Risk Assets

Despite the uncertainty surrounding monetary policy, Bitcoin has remained relatively stable throughout July, while semiconductor companies and other AI-related stocks have faced selling pressure. This suggests crypto may be starting to show some degree of independence from traditional risk assets.

“With the Nasdaq entering July after a strong rally and increasingly crowded positioning, while BTC continues to consolidate near multi-year lows, weaker correlations are to be expected,” Vetle Lunde, head of research at K33 Research, wrote in a Tuesday report.

He added that because of this shift, this week’s FOMC decision may have a smaller impact on Bitcoin than previous periods of heightened policy uncertainty.

The gap between stock market performance and Bitcoin has widened this month, Block Scholes said. Bitcoin has gained roughly 6% in July, while the S&P 500 has remained mostly flat and a group of semiconductor stocks has declined nearly 20%.

Rahman said market expectations have shifted repeatedly over the past month as cooling inflation data competed with concerns over geopolitical risks, rising oil prices, and tariff uncertainty.

Despite these challenges, he said sentiment toward crypto has continued to strengthen.

Rahman added that “anything remotely dovish” from Fed Chair Warsh could allow Bitcoin’s recent relative strength to continue.