Bitcoin Above $64,000 in Asia Hours Ahead of Fed Decision

Bitcoin traded above $64,000 on Wednesday, up 1% on the day, with the broader market in positive territory ahead of the Federal Reserve's rate decision at 2 p.m. ET, per CoinDesk data. Ether added 1.7% to $1,909 and XRP led the majors at 2.6%.

The base case was a hold. About 70% of traders expected the Fed to keep its rate at 3.50% to 3.75%, a sixth straight meeting on pause, per CME data. But roughly 30% priced a quarter-point hike, and the case had serious backers: Citadel Securities told clients it expected a surprise increase this week to shore up Chairman Kevin Warsh's inflation-fighting credibility, and UBS said such a move would not surprise it.

Bitcoin Shows No Signs of Stress Despite Uncertain Fed Call

Bitcoin's annualized 30-day implied volatility index, BVIV — the so-called fear gauge — continued to hover below 40%, well below highs above 60% seen during the early June and early February price sell-offs. The index is influenced by demand for options, or hedging instruments. The low reading indicated limited demand for protective options, suggesting traders saw little reason to brace for sharp price swings in the near term.

This stability contradicted the uncertainty surrounding Wednesday's Fed rate decision. While most observers expected the central bank to keep rates unchanged, some, including hedge fund giant Citadel, expected a hike in borrowing costs. The CME's FedWatch tool assigned roughly a 35% probability to a rate hike at the upcoming FOMC meeting, an unusually high level of uncertainty for this late in the decision cycle. Fed moves are normally almost fully priced for a single outcome — hold, hike, or cut — by this stage.

BEAT, UNI, JUP Lead Crypto Market Higher

As of 11:38 UTC, smaller tokens led the crypto market higher ahead of the pivotal Fed rate decision. Audiera's BEAT token was up 28% over 24 hours, the best performance among the top 100 tokens by market value. Uniswap's UNI was a distant second with a 7.2% gain, followed by Jupiter's JUP, up 7%. The CoinDesk DeFi Select Index gained 2.8%.

The Fed was widely expected to keep interest rates unchanged later Wednesday, but a notable minority expected a hike.

Oil Back on the Rise as Hostilities Re-ignite in Iran

In what was described as a "surprise attack" in the WSJ, U.S. forces in Jordan were fired upon by missiles overnight. The missiles were reportedly intercepted and caused no damage. WTI crude oil surged 4.3% to $82.68 on the news, but broader markets appeared mostly unaffected. U.S. stock index futures pointed to small opening gains, and bitcoin posted a 1.5% advance to $64,400.

Wednesday's main event was the Federal Reserve rate decision. Markets leaned toward the U.S. central bank staying on hold but had priced in about a 35% chance that Kevin Warsh and team would surprise with a 25 basis point rate hike.

Trump Says Iran to Be Hit Hard, Sending Oil Surging Higher

Speaking with Fox News, President Trump said Iran would be hit hard in response to the previous night's missile attack on U.S. forces in Jordan. Oil extended a 4% rise to nearly 7% following the comments, trading at $84.63. Nasdaq 100 futures slipped about 0.5% and were then down 0.2%. Bitcoin edged lower but remained higher for the day at $64,200.

Yields on the Rise Ahead of Fed Decision

The bond market sold off with less than two hours to go before the Fed's rate decision. The two-year Treasury yield — traditionally considered the most responsive to central bank policy — was higher by 5.3 basis points to 4.33%. The ten-year yield rose 4.7 basis points to 4.65%. Both yields were near cycle highs.

The jump in yields may have been less about what the Fed might or might not do and more a response to a 7% rise in oil prices on Wednesday, driven by renewed Middle East flare-ups. To the extent that crude prices influence inflation, oil and bond yields have had a highly positive correlation in recent months.

The bond selloff spread to stocks, which were at session lows just past noon. The Nasdaq was down 1.5%, and the S&P 500 was lower by 1.2%. Bitcoin was also near a session low but still modestly higher for the day at $63,900.

Fed Holds Rates Steady, Extending Pause as Markets Await Warsh's Policy Roadmap

The Federal Reserve left its benchmark fed funds rate range unchanged at 3.50%–3.75% on Wednesday, extending its pause for a sixth consecutive meeting as policymakers continued to grapple with stubborn inflation.

Bitcoin (BTC) rose modestly immediately after the decision, up 1.25% over the past 24 hours to $64,500. U.S. stocks narrowed losses, with the Nasdaq down just 0.1% after being lower by more than 1%.

The decision came after one of the most uncertain pre-meeting setups in years. Futures markets had assigned roughly a 65% probability to a hold and 35% odds of a quarter-point increase, according to CME FedWatch data. It was an unusual setup, as for years the Fed had typically tried to communicate to markets the direction it would take on policy.

There were three dissents from the vote to hold steady, with nine voting in favor. Attention turned to Chair Kevin Warsh's post-meeting press conference. Warsh has been openly critical of the Fed's traditional use of forward guidance — the practice of signaling policy intentions in advance — and the quarterly "dot plot," a chart of individual committee members' rate projections that investors have long used to gauge the Fed's expected rate path. Investors watched closely for signs that the central bank's communication strategy was changing under his leadership.

Warsh: There Is No Soft Inflation Target

Fed Chairman Kevin Warsh opened his post-meeting press conference with a hawkish tone. "There is no soft inflation target," said Warsh, reiterating his view that any inflation print above 2% is unacceptable. His words sent risk markets down slightly, with bitcoin trading below $64,000 and the Nasdaq lower by 0.4%.

Warsh: Asked for a Good Family Fight and I Got One

Fed Chairman Kevin Warsh said this week's policy meeting — which resulted in three dissents from the vote to hold rates steady — included a "robust" discussion. Asked about the recent sharp rise in yields, Warsh said the Fed is observing that move but trying to stay out of it. "Even if we haven't done much, markets have quite a bit."

Warsh: Question for Fed Is Whether Raising Rates Would Fix Inflation

The big debate at the Fed's meeting this week, said Chairman Kevin Warsh, was about the cause of the current inflation spurt and whether changing policy (i.e., a rate hike) would fix that. That wording implies that Warsh — and at least some of the other eight who voted to hold policy steady — believe higher rates won't cure the recent rise in inflation, which could be a result of the Iran war-related oil price spike and perhaps the large rise in memory chip prices caused by the AI boom. The distinction matters because if the Fed views inflation as driven by supply-side shocks rather than demand, it may continue to resist rate hikes even if price pressures persist — a stance that would typically be supportive of risk assets like crypto.

Yield Curve Steepens After Fed Holds Rates Steady

The ten-year Treasury yield jumped 5.5 basis points to 4.66% after the Fed left overnight rates steady. At the same time, the two-year yield slid six basis points to 4.22%. The action should not have been surprising, given that many had placed bets the Fed might hike rates that day. The unwind of those bets would likely pressure two-year rates. Still, other things being equal, a steepening yield curve could be read as markets baking in a rate of inflation higher than previously thought.

U.S. stocks, after briefly moving into positive territory, resumed lower, with the Nasdaq down 0.6% and the S&P 500 off 0.75%. Bitcoin also gave up its knee-jerk gain, trading just below $64,000, up 0.45% over the past 24 hours.

Ugly Close in Markets as Trump Vows Retaliation Against Iran

Any positive sentiment from the barely dovish tilt to the Kevin Warsh press conference was lost as President Trump — speaking with reporters in the Oval Office — said the U.S. will respond to Iran's attack against American forces in Jordan the previous night.

His remarks sent oil back to near its session high, up 7.2% to $85 per barrel. The Nasdaq tumbled to its session low, down 1.75%. Bitcoin gave up its gains, down 0.5% to $63,500. The 30-year Treasury yield, meanwhile, soared 10 basis points to about a 19-year high of 5.20%.

AI Favorites Sharply Lower Again, Dinging Nasdaq

An early attempt at a revival of the AI momentum trade faded about an hour into Wednesday's session. Familiar former favorites like SanDisk, Micron, AMD, Applied Materials, and KLA Corp. were lower by 3%–6%, while Nvidia was down 2.4%. The VanEck Semiconductor ETF (SMH) was down 2.5% on the day and nearly 20% month over month.

"Everyone owned some version of the AI momentum trade and many were slow to react to the rollover in AI winners and hardware," said Goldman Sachs following the previous day's carnage. "The last few days have seen multiple-sigma moves across long/short books without much movement in the broader indices. This is much more a deleveraging and de-grossing event than a macro one."

The broader Nasdaq was down just 0.8% as Microsoft, Meta, Google, and Amazon traded closer to unchanged. Bitcoin remained higher by nearly 2% over the past 24 hours at $64,300.

Nasdaq on Track for Worst Month in Nearly Four Years

The Nasdaq was down 9.5% thus far in July, putting it on pace for its worst monthly performance since a 10.6% decline in September 2022, according to Bespoke. That September 2022 performance marked the bottom of that year's bear market, Bespoke noted.

South Korea's Kospi Continues to Slide

South Korea's benchmark equity index, the Kospi, dropped 6% Wednesday, deepening the bear market that began after it hit a peak of 9,385 points on June 19. Since then, it has crashed by nearly 40%. The massive decline has been led by heavy slumps in shares of Samsung Electronics and AI-linked chip maker SK Hynix. AI-related stocks have recently fallen out of investor favor worldwide as investors question valuations.

Some analysts believe that capital outflows from overheated AI trades could potentially find their way into the crypto market.

"As the AI trade gets repriced, bitcoin may capture some of the value," 10x Research said on X. "Korea's Kospi just dropped 42%, dragged down by the same AI-trade tech names driving private LLM valuations. If that correlation holds, Anthropic and OpenAI are due for a serious repricing, and the reason isn't demand, it's commoditization."

U.S. Should Not Ban Chinese AI: Mark Zuckerberg

Banning Chinese AI in the U.S. would not be "an effective solution," said Meta CEO Mark Zuckerberg in an FT interview. His comments came in the wake of China's Moonshot AI release of its Kimi K3 model and accusations by U.S. officials that Moonshot secretly trained Kimi from U.S.-based OpenAI and Anthropic. Zuckerberg told the FT a ban isn't a good idea and the U.S. should instead "systemically" identify bottlenecks and roadblocks to better compete with China.

Meta Falls 5% After-Hours Following Earnings Miss

Meta (META) reported second-quarter EPS of $6.18 versus Street estimates of $7.14. Revenue of $60.8 billion topped forecasts for $60.4 billion. The mid-point of third-quarter revenue guidance of about $63 billion was in line with estimates. The company lifted the lower end of full-year AI-related capex spending, now seeing $130 billion–$145 billion versus $125 billion–$145 billion previously. Shares were lower by 5.4% in after-hours trading.

Microsoft on the Rise After Topping Earnings Estimates

With AI infrastructure stocks in free-fall, the last thing the broader market needed was the hyperscalers imploding. There was bad news when Meta reported a sizable second-quarter earnings miss, but Microsoft's just-reported beat helped offset the damage.

Microsoft reported fiscal fourth-quarter EPS of $4.74 versus $4.24 expected, and revenue of $90.1 billion against $87.6 billion expected. The all-important capex spending guidance wasn't included in the results, but the company was expected to provide details during its post-earnings conference call. Shares were up 2% after-hours, while Meta continued 5.5% lower.

Morgan Stanley: More Investors May Enter Crypto Through Tokenized Assets

Morgan Stanley executives said tokenization — the process of issuing digital representations of real-world or financial assets on a blockchain — could be the technology that brings digital assets to a broader group of investors. During a panel discussion, Denny Galindo, investment strategist for Morgan Stanley Wealth Management, said tokenized products are gaining momentum and could become the first exposure many investors have to blockchain-based finance.

"I think we're going to see a lot of mainstream impact from something tokenized that people can buy that they used to have a hard time getting access to," Galindo said. "That'll probably be the first way crypto reaches people who aren't thinking about it all the time."

Galindo also said many investors have stopped at bitcoin (BTC), but growing access to ETFs and other digital asset products is creating new opportunities for portfolio construction. He noted that the appropriate allocation depends on whether investors view bitcoin as digital gold, a venture-style investment, or a portfolio diversifier, underscoring the need for education as digital asset offerings continue to expand.

Galindo separately said digital assets could attract more investor interest if the current focus on AI begins to ease. He said venture capital has largely flowed toward AI, limiting investment in other emerging technologies. "Everyone wants to spend their venture capital money on AI," Galindo said. "If that turns, I think there are a lot of opportunities here in crypto that people will be able to invest in." He expects opportunities to expand across digital assets, including stablecoins and tokenization, as the market matures and investor interest broadens beyond AI. The comments echoed the rotation theme gaining traction across markets, as the day's simultaneous sell-off in AI-linked equities — from U.S. semiconductor names to South Korea's Kospi — prompted growing discussion about whether capital concentrated in AI might eventually rotate into digital assets.

Cathie Wood Is Buying the SpaceX Dip and Reducing Exposure to Crypto-Linked Stocks

ARK Invest bought about $12 million of SpaceX on Tuesday, adding 105,108 shares across its ETFs as the stock rose 2.6% to $116.41, per the firm's trading disclosure. The stock has fallen 29% over the past month and trades well below its $135 June IPO price.

The Cathie Wood-led firm sold crypto-linked names, trimming about $4 million of Robinhood, $2.3 million of Block, and $1.6 million of Bullish — the crypto exchange that owns CoinDesk — all companies whose fortunes track digital-asset activity. The firm further added small positions in Bitmine and a Solana staking ETF, but the larger rotation ran out of crypto equities and into AI and space trade.

One of the market's most vocal bitcoin bulls is treating a beaten-down AI-and-space stock as the better place for risk capital, even as she trims exposure to crypto-adjacent equities. The purchases come as Morgan Stanley said earlier this week that SpaceX's selloff has pushed it to a level pricing its AI business at zero. The bank maintained a $300 price target.

Source: CoinDesk