Live updates: Bitcoin rises above $64,000 ahead of Fed rate decision

South Korea’s benchmark equity index, Kopsi, dropped 6% Wednesday, deepening the bear market that began after it hit a peak of 9,385 points on June 19. Since then, it has crashed by nearly 40%.

The massive decline has been led by heavy slumps in shares in Samsung Electronics and AI-linked chip maker SK Hynix. AI related stocks have recently fallen out of investor favor worldwide as investors question valuations.

Some analysts believe that capital outflows from overheated AI trades could potentially find their way into the crypto market.

“As the AI trade gets repriced, bitcoin may capture some of the value,” 10x Research said on X. “Korea’s Kospi just dropped 42%, dragged down by the same AI-trade tech names driving private LLM valuations. If that correlation holds, Anthropic and OpenAI are due for a serious repricing, and the reason isn’t demand, it’s commoditization.”

Bitcoin’s annualized 30-day implied volatility index, BVIV, the so-called fear gauge, continues to hover below 40%, well below highs above 60% seen during the early June and early February price sell-offs.

The index is influenced by demand for options, or hedging instruments.

So, the low reading indicates limited demand for protective options and suggests traders see little reason to brace for sharp price swings in the near term.

This stability contradicts the uncertainty surrounding Wednesday’s Fed rate decision. While most observers expect the bank to keep rates unchanged, some, including hedge fund giant Citadel, expect a hike in borrowing costs.

The CME’s FedWatch tool now assigns roughly a 35% probability to a rate hike at the upcoming FOMC meeting, an unusually high level of uncertainty for this late in the decision cycle. Fed moves are normally almost fully priced for a single outcome – hold, hike, or cut – by this stage.

Bitcoin traded above $64,000 on Wednesday, up 1% on the day, with the broader market green ahead of the Federal Reserve’s rate decision at 2 p.m. ET, per CoinDesk data. Ether added 1.7% to $1,909 and XRP led the majors at 2.6%.

The base case is a hold. About 70% of traders expect the Fed to keep its rate at 3.50% to 3.75%, a sixth straight meeting on pause, per CME data.

But roughly 30% now price a quarter-point hike, and the case has serious backers: Citadel Securities told clients it expects a surprise increase this week to shore up Warsh’s inflation-fighting credibility, and UBS said such a move would not surprise it.