Bitcoin continued to demonstrate resilience ahead of the Federal Reserve’s policy decision, maintaining levels above $63,000 and advancing approximately 6% in July. In contrast, technology and semiconductor stocks, especially those associated with artificial intelligence, experienced notable declines.
Fed uncertainty shapes market dynamics
Investors remain divided over whether the Federal Reserve will increase interest rates or hold steady in its upcoming meeting. Current pricing suggests a 70% probability that rates will remain unchanged and a 30% chance of a 25-basis-point hike, based on data from CME FedWatch.
This division reflects a broader lack of clarity from Federal Reserve Chair Kevin Warsh, whose reduced use of forward guidance has left market participants uncertain. Block Scholes, a firm specializing in derivatives analytics, highlighted the heightened uncertainty surrounding this meeting.
Thahbib Rahman, research analyst at Block Scholes, characterized the upcoming Federal Open Market Committee session as among the most uncertain since 2015, stating only two meetings in that period generated a more divided market outlook.
Tomorrow’s FOMC meeting, Kevin Warsh’s second as chairman of the Fed, is one of the most uncertain in years, highlighted Thahbib Rahman at Block Scholes.
Decoupling from equity markets
Despite macroeconomic uncertainty, bitcoin has diverged from traditional risk assets in recent weeks. The cryptocurrency recovered quickly from intra-day losses to hover just below $64,000 on Tuesday, even as chipmakers and AI-centric stocks continued to face selling pressure.
Analysts pointed out that bitcoin’s correlation with equity markets, particularly the Nasdaq and semiconductor sectors, has weakened. This softer relationship has led some to believe that the Fed’s policy move may exert less influence on bitcoin’s near-term price action compared to previous cycles.
Vetle Lunde, head of research at K33 Research, commented in a new report that as stretched positioning in Nasdaq persists while bitcoin consolidates near multi-year lows, historical ties between the two asset classes appear to be loosening. Lunde observed that this could mean the FOMC meeting’s impact on bitcoin will be more muted than during prior episodes of heightened policy uncertainty.
With the Nasdaq entering July with strong momentum but stretched positioning, while BTC holds near multi-year lows, correlations are softening and the Fed meeting may have a more limited impact on BTC, noted Vetle Lunde at K33 Research.
According to Block Scholes, the divergence has become more noticeable in July, with bitcoin up about 6% for the month, the S&P 500 remaining largely flat, and a semiconductor stock basket dropping close to 20%.
| Asset | Monthly Change (July) |
|---|---|
| Bitcoin | +6% |
| S&P 500 | 0% |
| Semiconductor Stocks | −20% |
Improving crypto sentiment
Rahman noted that recent swings in market expectations stem from a combination of softer inflation data, renewed geopolitical tensions, higher oil prices, and concerns about tariffs. Despite this, optimism around digital assets has strengthened in recent weeks.
Rahman suggested that any dovish signals from Chair Warsh could further support bitcoin’s outperformance versus risk assets.
Binance, the world’s largest cryptocurrency exchange, has retained an estimated 55% share of user funds and 24% of spot trading volume since June, attracting net inflows in early July while tracked markets saw outflows.
Block Scholes, based in London, specializes in cryptocurrency derivatives analytics and provides research on digital asset market structure and macroeconomic risk. K33 Research is an independent digital asset research firm offering analysis on crypto market trends and blockchain data.
Mini dictionary: CME FedWatch, a tool provided by the Chicago Mercantile Exchange, tracks market expectations for future changes in the Federal Reserve’s policy interest rates.
Key participants and institutional investors now await the outcome of Wednesday’s policy meeting as a potential catalyst for further price movement in both equities and crypto markets.
