BTC investors raise stablecoin allocations ahead of Fed rate decision

Crypto investors are reducing risk exposure and increasing stablecoin allocations ahead of the U.S. Federal Reserve's rate decision, according to a CoinDesk analysis. CoinDesk said stablecoins are showing the clearest market move as investors build liquidity before the Fed announcement, with attention focused not only on the rate decision itself but also on where sidelined capital may flow afterward. CoinDesk added that past rate hikes have not always had a major impact on BTC prices. When the Fed last raised rates in July 2023, BTC showed little price movement as expectations had already been priced in, the outlet said. It also noted leverage in the derivatives market remains relatively subdued, with open interest in Bitcoin perpetual futures below its annual average and no clear sign that excessive leverage has built up to the point where a price drop would trigger cascading liquidations. The market is paying closer attention to what Chairman Kevin Warsh signals about the future rate path than to whether the Fed raises rates, CoinDesk said.