Bitcoin Breaks Above $64K as Traders Brace for Crucial Fed Rate Decision

Markets are largely expecting the Federal Reserve to keep interest rates unchanged at Wednesday’s meeting, but a small group of investors is preparing for a surprise hike, with firms including Citadel Securities and UBS highlighting that possibility.

Trump Warns Iran Will Face Strong Response, Sending Oil Higher

In an interview with Fox News, President Trump said Iran would face a significant response following the previous night’s missile attack targeting U.S. forces in Jordan.

Following his remarks, oil prices extended their gains, rising from a 4% increase to nearly 7%, with crude trading around $84.63.

Nasdaq 100 futures moved lower, initially falling about 0.5% before recovering to a decline of roughly 0.2%.

Bitcoin slipped slightly but remained positive on the day, trading near $64,200.

Zuckerberg Says U.S. Should Avoid Banning Chinese AI

Meta CEO Mark Zuckerberg said banning Chinese artificial intelligence companies in the U.S. would not be “an effective solution.”

His comments came after China’s Moonshot AI introduced its Kimi K3 model, while U.S. officials accused the company of potentially using knowledge from U.S.-based AI firms such as OpenAI and Anthropic.

Zuckerberg argued that instead of imposing restrictions, the U.S. should identify structural challenges and address bottlenecks to strengthen its ability to compete with China in artificial intelligence.

Oil Rallies Again as Iran Tensions Escalate

Oil prices moved higher after renewed tensions involving Iran, following what the Wall Street Journal described as a surprise missile attack on U.S. forces in Jordan.

The missiles were reportedly intercepted and caused no damage, but the incident pushed WTI crude oil up 4.3% to $82.68.

Despite the energy market reaction, broader financial markets remained relatively calm. U.S. stock futures pointed toward modest gains, while Bitcoin climbed about 1.5% to $64,400.

The main market focus remained on the Federal Reserve’s interest rate decision. While most traders expected rates to remain unchanged, markets were pricing in around a 35% chance of a 25-basis-point increase from Fed Chair Kevin Warsh and policymakers.

Smaller Crypto Tokens Lead Market Gains Ahead of Fed Decision

Smaller cryptocurrencies outperformed ahead of the Fed announcement, with several altcoins leading the broader market higher.

Audiera’s BEAT token gained 28% over 24 hours, ranking as the strongest performer among the top 100 cryptocurrencies by market capitalization. Uniswap’s UNI followed with a 7.2% increase, while Jupiter’s JUP advanced 7%.

The CoinDesk DeFi Select Index also rose 2.8%.

Although the Fed is widely expected to maintain current rates, uncertainty remains elevated due to the possibility of a surprise increase.

South Korea’s Kospi Extends Decline Amid AI Stock Selloff

South Korea’s Kospi index dropped another 6% on Wednesday, extending a bearish trend that began after reaching a record high of 9,385 points on June 19. Since then, the benchmark has fallen nearly 40%.

The decline has been driven by sharp losses in major technology companies, including Samsung Electronics and AI chipmaker SK Hynix. Global investor enthusiasm for AI-related stocks has weakened as concerns grow over stretched valuations.

Some analysts believe capital leaving overheated AI trades could eventually move into cryptocurrency markets.

“As the AI trade gets repriced, bitcoin may capture some of the value,” 10x Research said on X, suggesting that falling valuations in AI-related assets could redirect investor interest toward digital assets.

Cathie Wood Shifts Capital From Crypto Stocks to Space and AI

ARK Invest purchased roughly $12 million worth of SpaceX shares on Tuesday, adding 105,108 shares across its ETFs as the stock gained 2.6% to $116.41. The purchase came after SpaceX shares dropped 29% over the past month and traded well below their June IPO price of $135.

At the same time, the firm reduced exposure to several crypto-related companies, selling approximately $4 million in Robinhood shares, $2.3 million in Block shares, and $1.6 million in Bullish shares.

ARK also added smaller positions in BitMine and a Solana staking ETF, but the broader move represented a shift away from crypto-linked equities toward artificial intelligence and space-related investments.

The repositioning comes as Morgan Stanley noted that SpaceX’s recent decline has effectively valued its AI business at zero while maintaining a $300 price target.

Bitcoin Volatility Remains Low Despite Fed Uncertainty

Bitcoin’s annualized 30-day implied volatility index (BVIV), often viewed as a market fear gauge, remains below 40%, well under the 60%+ levels seen during major sell-offs in early June and February.

Because the index reflects demand for options and hedging strategies, the current low reading suggests traders are not aggressively preparing for sharp price swings.

The subdued volatility comes despite uncertainty surrounding the Federal Reserve decision. While most market participants expect a pause, some major institutions, including Citadel, anticipate a possible rate increase.

The CME FedWatch tool shows around a 35% probability of a hike, an unusually high level of uncertainty so close to the policy announcement.

Bitcoin Holds Above $64,000 Ahead of Fed Announcement

Bitcoin traded above $64,000 during Asian trading hours on Wednesday, gaining about 1% as broader crypto markets moved higher ahead of the Federal Reserve’s decision.

Ether rose 1.7% to $1,909, while XRP led major cryptocurrencies with a 2.6% gain.

According to CME data, around 70% of traders expect the Fed to maintain its benchmark rate between 3.50% and 3.75%, marking the sixth consecutive meeting without a change.

However, approximately 30% of market participants are pricing in a quarter-point increase. Citadel Securities has warned clients about the possibility of a surprise hike, while UBS has also said such an outcome would not be unexpected.

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