Bitcoin has started trading more on its own ahead of the U.S. Federal Reserve’s Sept. 16 interest-rate decision, breaking its recent pattern of moving in step with the Dollar Index and U.S. equities, according to CoinDesk.
CoinMarketCap data show that bitcoin’s short-term correlation with the Dollar Index — which tracks the strength of the U.S. currency against a basket of peers — has dropped to nearly zero. Its positive relationship with stocks has also weakened.
Alice Liu, head of research at CoinMarketCap, said bitcoin’s short-window correlation of 15 days or less with the dollar index now stands at +0.08, compared with -0.54 over the past 30 days. Its correlation with the S&P 500 fell to 0.43 from 0.75 a day earlier, with the Nasdaq to 0.30 from 0.60, and with gold to 0.28 from 0.69 over 30 days.
The divergence is being linked to recent developments around the Clarity Act. The measure failed a key procedural vote in the Senate on Tuesday, shifting traders’ focus away from the usual macroeconomic drivers and toward regulation.
With those correlations fading, risk-management strategies that had recently worked are now less dependable. That includes hedging bitcoin exposure through S&P 500 index futures on the assumption that BTC would continue to trade like a risk asset.
Liu said a beta hedge that may have worked on Monday is no longer reliable today, and that the market reaction to the FOMC could be overshadowed by further regulatory fallout. That makes the Fed decision a test of whether bitcoin reconnects with the dollar and equity markets or continues to trade mainly on regulatory headlines.
The Fed is widely expected to raise interest rates by 25 basis points. The move is largely priced in, the article says, and most investment banks still expect additional hikes before year-end. The decision is due at 2 p.m. ET.
Unless Chair Kevin Warsh delivers a larger increase or unexpectedly hawkish guidance, some analysts believe the Dollar Index could weaken. A softer dollar, in isolation, would be supportive for bitcoin.
Traders are also watching U.S. Treasury yields. A sharp rise in yield volatility could tighten financial conditions and revive risk-off flows across crypto markets.
Alex Kuptsikevich, chief market analyst at The FxPro, said the current market lull can largely be explained by expectations for signals from the Fed later on Wednesday, which may have a bigger impact on volatility than the already priced-in 25-basis-point increase.
Technical picture
A TradingView chart shows BTC’s hourly candlesticks since Aug. 20. Prices had held in a tight range above $76,000 until yesterday, when sellers finally broke below that band and established a foothold under the level.
Chart analysts describe that as a range breakdown, a bearish signal that often precedes further losses.
