Fed Rate-Hike Fears Sink Bitcoin, Gold and Stocks

Investors had largely expected the Federal Reserve to leave interest rates unchanged in July, but shifting inflation and economic signals have reopened debate over the policy path. Wall Street institutions are increasingly divided, prompting a broader repricing across US equities, cryptocurrencies and Asian markets. The uncertainty has intensified risk aversion just as Microsoft and Meta prepare to release earnings that could shape the outlook for technology stocks.

The implied probability of a surprise Fed rate increase has climbed to about 34% in two weeks ahead of the central bank’s decision early Thursday. The sharp shift in expectations rattled global markets, with South Korean equities triggering a circuit breaker as selling accelerated. Bitcoin also fell toward $63,200, while investors braced for Microsoft and Meta results alongside the July policy announcement.

The annual increase in the U.S. consumer price index rose to 4.2% in May, topping the 4% threshold. Markets responded by reassessing the Federal Reserve's scope to cut rates in the second half of the year and raising expectations of rate hikes. Higher interest rates increase the opportunity cost of holding non-yielding assets, putting Bitcoin, gold and silver under pressure.

Safe-haven and crypto assets faced a selloff after the latest inflation data, with Bitcoin falling below $62,000 and gold and silver prices also tumbling. Attention has shifted to the Federal Reserve's next interest-rate decisions. If the rise in May's 4.2% annual CPI reading persists, monetary policy could remain hawkish in the second half, prompting more conservative capital allocation.

Bitcoin is highly sensitive to expectations for U.S. interest rates and liquidity, while Federal Reserve rate decisions often drive crypto-asset valuations. Markets are now focused on how Chair Jerome Powell will assess changes in inflation and oil prices. His remarks could shape expectations for rate cuts and determine whether capital continues flowing into risk assets.

Bitcoin briefly touched $76,000 ahead of the Federal Open Market Committee's April 29 decision before retreating to around $74,000, including a short-lived intraday drop below $75,000. Ether, meanwhile, approached $2,200. Traders turned cautious and watched for signs of a hawkish tilt in Powell's post-meeting comments.