A Softer Fed Stance Could Be the Catalyst Bitcoin Bulls Are Waiting For

Traders remain uncertain about whether the Federal Reserve will deliver a rate hike or keep borrowing costs unchanged on Wednesday, but analysts believe Bitcoin could be better positioned than AI-focused technology stocks if markets face renewed volatility.

Bitcoin recovered from earlier losses on Tuesday and traded near the $64,000 level, while artificial intelligence-related stocks continued to struggle ahead of one of the most closely watched and uncertain Fed meetings in years.

According to CME FedWatch data, markets are currently assigning a 70% chance that the Fed keeps rates steady and a 30% probability of a surprise 25-basis-point increase. Derivatives analytics firm Block Scholes said the uncertainty reflects Fed Chair Kevin Warsh’s limited use of forward guidance, leaving investors with fewer signals about the central bank’s policy direction.

“Tomorrow’s FOMC meeting, Kevin Warsh’s second as Fed chair, is one of the most uncertain in years,” said Thahbib Rahman, a research analyst at Block Scholes. He pointed out that only two Fed meetings since 2015 have generated greater uncertainty among market participants over the final decision.

Bitcoin Begins to Separate From AI-Driven Market Trends

Although investors remain focused on the Fed’s next move, Bitcoin has largely maintained its strength in July while semiconductor companies and other AI-related stocks have faced significant declines. The divergence suggests crypto may be starting to distance itself from traditional risk assets.

“With the Nasdaq entering July after a strong rally and increasingly stretched 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.

Lunde said the changing relationship between Bitcoin and equities could mean this week’s Fed decision has a smaller effect on BTC compared with previous periods of major monetary policy uncertainty.

Block Scholes noted that the performance gap between Bitcoin and stocks has become more visible this month. Bitcoin has climbed around 6% in July, while the S&P 500 has remained mostly unchanged and semiconductor stocks have dropped close to 20%.

Rahman said market expectations have shifted sharply in recent weeks as cooling inflation data competed with concerns over geopolitical tensions, rising crude prices, and tariff-related uncertainty.

Despite those risks, he said sentiment across the crypto market has continued to improve.

Rahman added that even a slightly dovish signal from Fed Chair Warsh could support Bitcoin’s continued outperformance in the near term.