Bitcoin Drops 2.5% to $63K as Fed Uncertainty Shakes Crypto Markets

Crypto markets are waking up to a harsh reminder: decentralization doesn't mean immunity from central banks. With Bitcoin now more than 50% below its October 2025 all-time high of $128,198, the looming Fed decision could determine whether the sell-off deepens or a relief rally takes hold. This moment tests both conviction and correlation.

The cryptocurrency market opened sharply lower on Tuesday, July 28, 2026, with Bitcoin (BTC) and Ethereum (ETH) both extending losses as investors braced for the start of the Federal Reserve's two-day policy meeting. According to data from Yahoo Finance, Bitcoin opened at $63,706.66, a 2.5% decline from Monday's open, and slipped further to $63,327.39 by mid-morning. Ethereum fared worse, opening at $1,890.67—down 3.2%—and trading at $1,877.71 shortly thereafter. The sell-off underscores the heightened sensitivity of digital assets to macroeconomic uncertainty, particularly as the Fed decision marks what some analysts are calling the hardest meeting to predict in years.

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According to data from Yahoo Finance, Bitcoin opened at $63,706.66, a 2.5% decline from Monday's open, and slipped further to $63,327.39 by mid-morning.

The primary driver of the risk-off sentiment is the lack of clarity around the Fed's next move. The CME Group's FedWatch tool, which tracks market-implied probabilities of Federal Open Market Committee (FOMC) rate changes, showed a 35.8% probability of a rate hike at this meeting, up sharply from 25.7% the prior week. While still a minority view, the steep increase in hawkish expectations has rattled markets that had largely priced in a pause. If the Fed does raise rates, it would be the first increase since the central bank began its easing cycle earlier in the year, reversing the course that had supported risk assets, including cryptocurrencies.

Adding to the volatility are geopolitical developments and sector-specific concerns. Reports of potential peace progress in the Middle East have created a mixed backdrop, as a de-escalation could reduce haven demand but also remove a source of supply-chain disruption that had supported certain commodities. Meanwhile, negative headlines around AI circular funding—referring to opaque investment loops among AI startups—have soured sentiment in tech-heavy indices, further weighing on crypto, which often trades in sympathy with growth stocks.

The price movements are particularly stark when viewed against the backdrop of recent all-time highs. Bitcoin reached its historical peak of $128,198.07 on October 6, 2025, meaning the current price represents a more than 50% decline from that zenith. Ethereum’s record stands at $4,953.73 from August 24, 2025; at current levels, it has retraced over 62%. This extended drawdown has tested the conviction of long-term holders and raised questions about the durability of the previous bull cycle.

Looking ahead, Wednesday’s FOMC statement and the accompanying press conference will be pivotal. A surprise rate hike could trigger a sharp repricing across all risk assets: Bitcoin might test critical support near $60,000, while Ethereum could slide below $1,800. Conversely, if the Fed holds rates steady and strikes a dovish tone, a relief rally could quickly propel Bitcoin back above $65,000. However, given the elevated probability of a hike, positioning appears skewed to the downside, with derivative markets likely reflecting a cautious stance. Open interest in Bitcoin futures may show elevated put activity, though data was not immediately available.