Kevin Warsh’s no-guidance Fed breaks a 30-year playbook – leaving Bitcoin vulnerable to surprise rate hike

Bitcoin fell over the past 24 hours as traders positioned for a Federal Reserve decision that could break a market pattern dating back more than three decades.

Data from CryptoSlate showed the largest cryptocurrency falling as much as 3% to $62,913, its lowest level in nearly two weeks, before recovering to $63,795 as of press time.

The weakness comes ahead of the Fed’s July policy meeting, only the second under Chairman Kevin Warsh. The US central bank has kept its benchmark rate unchanged at 3.50% to 3.75% since December, while President Donald Trump has repeatedly pressed policymakers to lower borrowing costs. Still, investors largely expect policymakers to leave rates unchanged Wednesday.

Futures markets assign roughly a one-in-three probability to a quarter-point increase, creating the potential for a sharper repricing across risk assets if the Fed opts to tighten. Warsh’s no-guidance Fed makes the old playbook less reliable Bank of America said the bigger risk lies in how little of a potential hike markets have priced before Wednesday’s decision.

The bank said the Fed has not raised rates since 1994 when markets had assigned less than a 60% probability to an increase beforehand. Futures currently embed only about 10 basis points of tightening, far short of the 25 basis points policymakers would deliver with a standard hike. Block Scholes told CryptoSlate that the uncertainty is already historically unusual.

The firm put the probability of a hike at 33.7%, with only two