Bitcoin Suspended by Fed Decision: What’s at Stake This Wednesday

The Fed's interest rate status quo remains the most likely scenario

On July 28 and 29, 2026, the FOMC (Federal Open Market Committee) meeting will discuss the monetary policy to be adopted by the Federal Reserve of the United States. The market consensus expects interest rates to remain in the current range of 3.50% to 3.75%. After rate cuts at the end of 2024 and 2025, the Fed is expected to continue to pause.

However, according to the CME Group's FedWatch tool, which calculates the probabilities of Fed rate movements, there is already a 29.4% chance of a surprise rate hike between 3.75% and 4% as early as July 29. For upcoming meetings, particularly the one on September 16, there is only a 24.6% chance of keeping rates unchanged, compared to a 75.4% chance of a hike of 25 or 50 basis points.

Bond markets have already begun to factor in this significant probability of a Fed rate hike by the end of 2026. A scenario that was still unlikely just a few months ago.

At the FOMC meeting on September 16, 2026, the Fed could very well raise interest rates, according to FedWatch.

Three Scenarios for Bitcoin

This development reflects ongoing concerns about inflation, as the conflict in the Middle East and tensions over oil have brought the risk of rising consumer prices back to the forefront. The real catalyst for Bitcoin will not be so much the announcement of the new benchmark rate but the "dot plot" (the forecasts of FOMC members) and especially the language used by Kevin Warsh during the press conference.

1 - Central Scenario (dovish status quo): Kevin Warsh maintains the course and reiterates that the Fed remains "data-dependent" (dependent on economic statistics), even if a rate cut by the end of the year remains unlikely. This would be the most favorable scenario for Bitcoin and risk assets, allowing BTC a window for rebound.

2 - Moderate Hawkish Scenario: The dot plot incorporates a rate hike by the end of the year, and Warsh adopts a cautious tone due to inflation and geopolitical tensions. Bitcoin could then continue to stagnate within the range of recent weeks, or even struggle to maintain current price levels.

3 - Strong Hawkish Scenario: A surprise on the dot plot or particularly firm rhetoric. The already fragile crypto market could then experience a more pronounced correction, with even a possible new low for Bitcoin.

Bitcoin ETFs in the Spotlight

According to Citadel Securities, Kevin Warsh is expected to adopt a relatively hawkish tone at the end of this FOMC meeting. The investment bank anticipates that the new Fed chair, known for his rigorous stance on inflation, may use this intervention to mark his difference and reassure markets about his anti-inflation credibility. This positioning could limit bullish enthusiasm for Bitcoin in the short term, even in the event of a status quo on rates.

Additionally, Bloomberg reports that Bitcoin ETFs have seen their series of net inflows (which lasted for 7 consecutive trading days) end last weekend. This indicates that institutional investors are becoming more cautious ahead of the meeting. As shown by data from Farside Investors, these net outflows particularly affected BlackRock's iShares Bitcoin Trust (IBIT), with nearly $415 million in negative flows in just 2 days, on July 23 and 24.

President Trump in the Background

U.S. President Donald Trump has once again criticized the Fed's inaction this Monday, stating that "rates should be lowered" by central bankers. Since his election, Trump has always favored a rapid reduction in the Federal Reserve's rates. The political pressure from the White House continues to be felt by the Fed.

In summary, Bitcoin remains hopeful that the communication from the Fed and Kevin Warsh will not be too hawkish, so as not to deter investors from betting on risk assets like cryptos and stocks. For a status quo on rates accompanied by a balanced discourse from Warsh could serve as a bullish trigger for BTC, while a nearly certain prospect of rate hikes could keep the king of cryptos in its current stagnation (or worse, provoke a new plunge). The suspense ends tonight at 8 PM Paris time for the rates, although Warsh's subsequent speech will be equally crucial for the markets.