Bitcoin slides ahead of Fed decision that prices in 25bp hike

CoinDesk reported that bitcoin traded at $75,800, a decline of nearly 3% in the last 24 hours before the Federal Reserve’s rate decision. Other tokens, including JUP, XLM, and ICP, dropped by about 10% along with the largest cryptocurrency by market value.

Markets have largely priced in a 25-basis-point increase, which would set the federal funds target range at 3.75%-4%, according to the CME FedWatch tool. The central bank is due to release its decision at 2:00 PM ET, with Chair Kevin Warsh holding a press conference 30 minutes later. Long-term borrowing costs remain elevated, with the 10-year Treasury yield sitting close to 5% after gaining roughly 80 basis points year-to-date.

The Brookings Institution senior fellow Robin Brooks, who formerly served as chief economist at the Institute of International Finance, stated that the upcoming press conference will probably let markets down because of aggressive expectations. “Tomorrow's Fed meeting is a nightmare for Warsh. There's no way he can live up to all the hikes priced, so the press conference will likely disappoint markets. The Dollar is likely to fall and long yields likely to rise,” Brooks said.

Crude oil prices on both sides of the Atlantic have climbed back above $100 a barrel. A softer tone from the Fed could reduce the dollar’s strength and drive long-term Treasury yields higher due to inflation and debt worries, which might support bitcoin and gold following any initial selling.