As Bitcoin.com News reported yesterday, CME FedWatch data indicates a 95% to 98% probability that the Federal Reserve will keep rates unchanged at its meeting on Wednesday. This would mark the fifth consecutive meeting where the central bank has left its benchmark rate unchanged since Warsch assumed the Fed chairmanship in May, succeeding Jerome Powell.
Bitcoin has already priced in some of this uncertainty: on Tuesday, the asset dropped to an intraday low of $62,684 before recovering and trading near $63,660 — representing a daily decline of roughly 2%, which pushed its July losses to 4% (with $134 million in Bitcoin long positions liquidated in a single day).
Mike McCloskey, co-founder of TX and former head of Fidelity, directly characterized the situation, stating:
"The market has been patient for six weeks. This week, we will find out if that patience was warranted."
He added that maintaining the current policy combined with "hawkish" statements or an unexpected rate hike "would quickly bring the $58,000 to $60,000 range back into view."
TD Securities Sees Risk of Mispriced Rate Hike
Despite markets leaning so clearly towards expecting rates to remain unchanged, TD Securities argues that traders are still underestimating the risk associated with the opposite scenario. The bank stated that the dollar will begin to fall once the Fed confirms that rates will be held steady, arguing that current pricing reflects an overstated probability of a rate hike that policymakers are unlikely to deliver.
This view is based on an earlier note in which TD Securities strategists pointed out that the assessed probability of a rate hike appears questionable, as market rates for a hike increased amid rising oil prices and escalating tensions between the U.S. and Iran. The strategists deemed an actual July rate hike unlikely, arguing that the geopolitical risk premium priced into rate futures exaggerates expectations for what the FOMC will actually do at this meeting.
The stakes related to this mispricing are unusually high by historical standards. If the current assessment of rate hike risk persists until the decision on Wednesday, TD Securities notes, it would represent one of the largest gaps between market pricing and the Fed's actual actions in the past decade—a gap the bank expects to narrow once Warsch confirms the hold.
Looking beyond Wednesday, TD Securities forecasts further dollar weakness over time, expecting it to fall by about 2% in the second half of 2026, as the Fed continues to hold rates steady rather than pivot to policy tightening. This forecast is based on the assumption that the central bank will require more compelling evidence of sustained inflation and labor market strength before it even considers raising rates—and the bank does not expect this threshold to be crossed any time soon.
What a Policy Hold Could Mean for Bitcoin
The decision to hold rates has direct implications for crypto markets for the rest of the week. The Fed meeting comes just ahead of the July 30 release of the Core Personal Consumption Expenditures (PCE) Price Index and Q2 GDP data, both of which could either support or counter the tone Warsch sets at his 2:30 p.m. ET press conference.
McCloskey laid out the case for a Bitcoin rally if the numbers are favorable, i.e., a rate hold combined with a "dovish" tone, strong artificial intelligence capex forecasts, and positive PCE data could turn the $65,000 level into a real attempt to reach the $68,000 to $70,000 range during August. Conversely, an unexpectedly "hawkish" tone risks pushing prices back down to the $58,000 to $60,000 zone he noted.
TD Securities' dollar forecast adds another variable to this picture. A weakening dollar has historically coincided with periods of relative strength for Bitcoin and other risk assets, as a weaker dollar tends to ease financial conditions globally, even while the Fed itself holds rates steady.
