Bitcoin Volume Hits 2023 Lows as Analyst Warns Fed Hike Would 'Have Serious Legs'

Bitcoin spot trading volume is on track for its weakest month since November 2023 as markets brace for a Fed decision with a one-in-three chance of a rate hike.July Has Been Bitcoin’s Quietest Month Since November 2023K33 Head of Research Vetle Lunde said in a Tuesday report that average daily spot volume across tracked exchanges reached just $2.2 billion in July, with the seven-day average at $2.1 billion, down 4% from the prior week.Derivatives markets were equally quiet, according to The Block.CME bitcoin open interest stayed near 2023 lows, and funding rates stayed between 5% and 7% all week — a setup portraying no conviction in either direction.What The Fed Decision Means For CryptoThe Federal Reserve announces its rate decision at 2 p.m. EDT Wednesday, with markets pricing roughly a one-in-three chance of a quarter-point hike, according to Reuters.Fed Chair Kevin Warsh has adopted a no-guidance approach, leaving markets to speculate rather than front-run his thinking.Macro analyst Alex Krüger said on X that a hike would have serious legs given how little of it is priced in.“If hike, short gold/silver, should have legs,” Krüger wrote, adding that the absence of forward guidance would make markets worry the hike represents the beginning of a new hiking cycle rather than a standalone move, making it tradeable after the fact.If the Fed holds rates steady, Krüger said higher-beta assets, including previously crowded AI trades, could reverse higher. He flagged memory stocks as the play in that scenario.What The Rate Debate Actually Looks Like Inside The FedWarsh’s 18 colleagues split evenly at the last meeting over whether to raise rates this year.Dallas Fed President Lorie Logan and Cleveland Fed President Beth Hammack both signaled support for higher rates ahead of Wednesday’s decision, with economists expecting at least one dissent either way.Meanwhile, Evercore ISI Vice Chairman Krishna Guha told Reuters that the case for a rate hike has weakened after consumer prices slowed to 3.5% year over year in June from 4.2% in May, making it difficult for the Fed to justify raising rates immediately after a stronger inflation report.But he acknowledged Warsh’s refusal to signal his intentions makes any confident call impossible.“It’s better to do a little now instead of a lot later,” said Neil Dutta, head of economics at Renaissance Macro Research, making the case for a surprise hike.Photo via Shutterstock