BTC, ETH, XRP Fall As CLARITY Act Fails, Rate Hike Looms

If the Fed delivers a hike alongside a credible path toward further increases, long-end yields could hold steady or even fall on improved inflation-fighting credibility. If instead it’s framed as a one-off insurance hike, longer-term yields could rise instead, as investors grow concerned about longer-term inflation expectations going unaddressed.

Global bond markets are under pressure, with the US, France, and Germany all seeing yields hit their highest levels in nearly two decades. The US 10-year yield has crossed the closely watched 5% mark, while oil prices continue edging higher on ongoing Middle East tensions and major stock indices tick lower ahead of today’s Fed decision.

Tom Lee said a Fed rate hike, if it happens, would likely be met calmly by equity markets, agreeing the move looks more like the Fed ceding to market pressure than its preferred course. He cited a Goldman Sachs study showing four factors distorting PCE inflation by 1.7 percentage points, from portfolio fees to tariffs and energy, arguing PCE is set to fall regardless of Fed action within six months. Lee remained bullish overall, saying markets have priced in hike expectations for weeks, with substantial cash still on the sidelines after consecutive down days, a setup he said could fuel a sharp rally.

The Fed’s rate decision lands at 2:00 PM ET today, with markets forecasting a move to 4.00% from the previous 3.75%. The FOMC statement and dot-plot release simultaneously at 2:00 PM ET, followed by Fed Chair Kevin Warsh’s press conference at 2:30 PM ET.

Bitcoin slipped to $75,521.32, down 1.6% over 24 hours, as crypto markets pulled back ahead of today’s Fed rate decision. Ethereum fell 3.4% to $2,388.22, while XRP led the declines, dropping 10% to $1.27 and down 11.2% over the past week. BNB eased 1.2% to $710.00. The broader retreat comes as traders position defensively heading into the FOMC announcement.

Markets are pricing a 95% probability of a rate hike at today’s FOMC decision. Since 2000, across more than 90 FOMC meetings, market expectations have proven wrong just five times, making today’s near-certain pricing a strong indicator of the outcome.