Bitcoin Loses Its Link to the Dollar and Stocks Ahead of Fed Decision
The price is reacting less to the Dollar Index and U.S. stocks, while the failed Clarity Act and the Fed decision are driving trading.
Key Takeaways
- Bitcoin traded more independently from the Dollar Index, U.S. stocks, and gold just before the Federal Reserve's rate decision.
- After the Clarity Act failed, Bitcoin fell about 4% to below $76,000, its lowest level in more than three weeks.
- Investors are now mainly watching the Fed decision, Chair Kevin Warsh's comments, and new signals around crypto regulation.
Bitcoin is moving noticeably away from the Dollar Index and U.S. stocks just before the Federal Reserve's rate decision. According to CoinMarketCap, the short-term correlation with the dollar has almost disappeared, while the link with the S&P 500, the Nasdaq, and gold has also weakened. At the same time, Bitcoin fell about 4% after the Clarity Act failed, dropping below $76,000 (€65,900), its lowest level in more than three weeks.
Correlations Fade
CoinMarketCap data show that Bitcoin now has a correlation of just +0.08 with the Dollar Index over a 15-day window or shorter. Over the past 30 days, that relationship was actually -0.54. The link with the S&P 500 also fell to 0.43, from 0.75 a day earlier. For the Nasdaq, it dropped to 0.30, from 0.60, and for gold to 0.28, from 0.69 over 30 days.
According to Alice Liu, head of research at CoinMarketCap, that makes the market less predictable right now for traders who normally treat Bitcoin as a risky asset alongside stocks. A hedge that worked before, for example by hedging Bitcoin with S&P 500 futures, has therefore become less reliable.
Clarity Act Sets the Tone
The shift is tied to attention on the Clarity Act, which lost a key procedural vote in the Senate on Tuesday. The bill was meant to create a federal framework for crypto and split oversight between the CFTC and the SEC, but it did not get the support it needed.
That political setback pulled attention away from the broader macro story. As a result, the market is now watching not only the Fed, but also whether Bitcoin will keep reacting mainly to regulatory news in the coming days.
What Investors Are Watching Now
The Fed is expected to announce a 25 basis point rate hike on Wednesday at 2:00 p.m. ET. The market has mostly priced in that scenario. Some analysts are therefore mainly watching Chair Kevin Warsh's comments, along with the reaction of the Dollar Index and U.S. Treasury yields.
For European crypto followers, this matters because Bitcoin often moves less on one single factor in moments like this and more on a mix of policy, rates, and regulation. The recent drop below $76,000 (€65,900) also shows how political and macro signals can quickly take turns as the main trading driver.
The expectation of a rate hike is also part of the price action, because a less hawkish message could weaken the dollar and give risky assets a boost instead.
