Polymarket Says "Hold The Line" On Fed, But Pro Traders Smell A Hawk 🦅

Prediction-market traders have sharply raised the implied odds that the Federal Reserve will defy expectations at its upcoming July meeting, with one day remaining before the central bank's two-day policy gathering begins. On Polymarket, the contract pricing a "no change" outcome dropped 8.9 percentage points to 73.25% over 24 hours, while the contract for a 25-basis-point increase climbed 9.7 points to 26.65%. Total trading on the question reached $100.83 million, including $5.78 million over the past day. Myriad, the prediction market operated by Decrypt parent company Dastan, displayed a similar 74%-to-27% split, with the "no change" probability down 9% and the hike probability up 8% over the same window. Professional rate traders appeared more jittery, as Fed-funds futures priced a 37.6% chance of an increase by Monday afternoon. A basis point equals 0.01 percentage point, and a 25-basis-point move would shift the Fed's current target range from 3.50%-3.75% to 3.75%-4.00%.

The Federal Open Market Committee will meet July 28-29 and release its interest-rate decision at 2 p.m. Eastern time on July 29. Rate increases tend to raise borrowing costs, slow spending and investment, and pressure risk assets, while decreases tend to ease borrowing and support assets such as Bitcoin and tech stocks. The Fed held rates steady in June and warned that inflation remained elevated, with officials' median projection placing the year-end rate at 3.8%. June inflation then cooled to 3.5% from 4.2% in May, giving policymakers additional reason to wait.

U.S.-listed spot Bitcoin ETFs, stock-market funds that hold $BTC so investors do not need their own crypto wallet, posted $225.2 million in net outflows on Thursday, ending a seven-session streak that had pulled in close to $1 billion. It marked the category's first negative day since July 13, with the outflows forcing funds to sell some of their $BTC holdings to meet redemptions.

Crypto asset manager Grayscale published a note Wednesday arguing that Bitcoin's bear market may already be over if the Federal Reserve does not raise rates, framing the upcoming decision as the key swing factor for near-term market direction.