A rare and significant divergence in market expectations has emerged ahead of the Federal Reserve's upcoming interest rate decision, with the probability of a rate hike versus a hold becoming increasingly uncertain. Analysts suggest that Bitcoin may demonstrate greater resilience compared to AI-driven technology stocks, as its correlation with the U.S. stock market appears to be weakening.
According to CME FedWatch data, the market currently assigns a 70% probability to the Fed maintaining interest rates in July, while a 25-basis-point surprise rate hike has a 30% chance. Derivatives analytics firm Block Scholes notes that this division reflects a lack of clear signals from investors regarding the central bank's next move, following Federal Reserve Chair Warsh's reduced use of forward guidance. The firm's analysts describe the upcoming Federal Open Market Committee (FOMC) meeting as one of the most uncertain in recent years, with market divergence prior to only two meetings exceeding current levels since 2015.
Despite the overarching uncertainty, Bitcoin has remained largely stable in July, while chip manufacturers and other AI-themed stocks have faced downward pressure, sparking discussions about a potential decoupling between crypto assets and traditional risk assets. The head of research at K33 Research points out that the Nasdaq entered July with strong momentum and expanded positioning, while Bitcoin continued to consolidate near multi-year lows. The weakening correlation is considered expected, and the impact of this week's FOMC meeting on Bitcoin may be more limited compared to previous periods of policy uncertainty.
Data reveals that Bitcoin has risen approximately 6% in July, while the S&P 500 has remained broadly flat. The semiconductor sector, however, has seen a decline of nearly 20%. Analysts observe that over the past month, market expectations have swung wildly due to a mix of softening inflation data, geopolitical tensions, rising oil prices, and tariff risks, yet the crypto market's sentiment has steadily improved. Analysts believe that if the Fed signals any dovish stance, Bitcoin could continue to outperform other assets.