The Federal Reserve will release its rate decision at 2 p.m. ET on Wednesday, with Chair Kevin Warsh scheduled to speak at 2:30 p.m. ET. In its July 29 Daybook, CoinDesk said the meeting still matters a great deal for bitcoin even though this FOMC gathering does not include updated economic projections or a dot plot.
An unusual amount of uncertainty remains
Fed meetings that come with fresh projections and a chart of policymakers’ rate expectations usually carry extra weight for traders. This one does not. Even so, CoinDesk argued that the outcome is unusually important because markets have not settled on a clear consensus going into the announcement.
CME fed funds futures still show roughly a 35% probability of a rate increase. CoinDesk described that level of indecision as rare this close to a decision, since traders have normally converged by this stage on a much clearer expectation of a hold, a hike or a cut.
The report also said Citadel, one of the world’s largest hedge funds, is predicting a rate increase. The firm’s view is that such a move would bring an end to forward guidance as a policy choice, an approach that CoinDesk said Warsh has long favored.
Treasury yields have already broken higher
The second reason lies in the bond market. CoinDesk said both the U.S. 10-year Treasury yield and the 2-year Treasury yield have moved above key trendlines that had marked the shallow pullback in place since 2023.
With that breakout complete, the report said the upside has become the clearer path. It added that the chart on the left tracks the 10-year yield in candlestick form, a benchmark borrowing cost for the U.S. economy, while the chart on the right shows the 2-year yield, which reacts more directly to short-term rate expectations.
According to CoinDesk, both yields have topped trendlines that represented a pullback pattern starting in October 2023, nearly three years ago. In that reading, the temporary pause has run its course, and the broader rise in interest rates that began in 2021 could soon gather speed again.
Oil is back in focus
The third factor is oil. WTI crude has climbed nearly 20% this month, while peace talks between the U.S. and Iran remain deadlocked. CoinDesk said that mix raises the possibility of inflation picking up again.
The report linked June’s inflation relief largely to the earlier selloff in oil prices. With crude now rebounding, the Fed has less room to lean dovish in its messaging.
In its “What’s trending” section, CoinDesk also cited Reuters, which reported that oil jumped more than 4% on Wednesday as tensions in the Middle East escalated. Reuters said the move followed U.S. and Saudi strikes in Iraq and an intercepted Iranian missile attack on U.S. forces, while a decline in U.S. crude inventories added to the rise.
What that could mean for bitcoin and crypto
CoinDesk said that if the Fed raises rates or delivers a hawkish message, bond yields that are already elevated could move sharply higher, creating a headwind for risk assets, including cryptocurrencies.
If, instead, the central bank downplays inflation worries even as oil prices rebound, crypto prices could see a sharp upside reaction.
Other market stories highlighted by CoinDesk
Beyond the Fed setup, CoinDesk listed several other stories that were drawing attention on Wednesday:
- Trade.xyz said it will reimburse all losses for traders liquidated after its SK Hynix perpetual futures contract plunged 19% late Monday. CoinDesk said the episode led to $60 million in crypto liquidations. The company blamed a single trade on a thin Korean pre-market venue rather than a failure in its own systems.
- Ionic Digital, the bitcoin mining company created out of Celsius Network’s bankruptcy, rose 26% in its Nasdaq debut. CoinDesk said the move valued the company at $2.8 billion and marked the exchange’s largest direct listing since 2021.
- CNBC reported that chip stocks tied to the AI boom have lost more than $1 trillion in market value this week. Nvidia accounted for $238 billion of that decline, while SK Hynix, Samsung Electronics and Micron lost $176 billion, $173 billion and $113 billion, respectively.
Bitcoin’s position before the Fed decision
CoinDesk’s internal trending list also showed bitcoin holding above $64,000 ahead of the rate announcement. The headlines cited in the newsletter included “Bitcoin steadies above $64,000 as crypto looks to Fed interest-rate decision” and “Live updates: Bitcoin clears $64,000 in Asia hours ahead of Fed decision.”
Another linked headline framed the split in expectations more directly: Citadel is betting on a Wednesday rate hike, while bitcoin analysts are calling for a hold.
Crypto flows and exchange share
At the end of the newsletter, in a section titled “Crypto Flows, Share and the Selective Rotation,” CoinDesk said market positioning has shifted since June, but Binance has held onto share. The exchange accounted for about 55% of user funds and around 24% of spot trading, and it saw net inflows in early July while the tracked market as a whole posted outflows.
The item ended with the prompt “Why it matters:” without adding further detail.