Bitcoin traders brace for Fed hike, but a surprise hold could pose bigger risk
Bitcoin is stuck near $80,000 as traders build stablecoin positions that could return to the market once Fed uncertainty clears.
Markets are pricing a 92.5% chance the Fed raises rates for the first time in three years after strong employment data and stubborn inflation. Bitcoin has spent the past 24 days stuck between roughly $76,000 and $80,000, with volatility falling to a one-month low.
“The bond market has done its job and fully priced in tomorrow’s hike,” said Chris Sullivan of Hyperion Decimus. In his view, the bigger shock could come if the Fed doesn't hike, since that could leave investors wondering what policymakers see that markets don't.
Talos has seen a 28% net buying tilt toward stablecoins ahead of the meeting, according to research analyst Cooper Duschang. Around previous Federal Open Market Committee meetings, investors showed an average 8% selling tilt toward stablecoins.
There is some precedent for a muted initial reaction. Bitcoin barely budged around the Fed's last rate hike in July 2023, Duschang said, with the move largely priced in before the announcement.