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Citadel calls for a surprise Fed rate hike, warning on risk assets

Citadel expects a 25-basis-point move that would lift the Fed benchmark to 3.75% to 4.0%, while bitcoin has pulled back from nearly $67,000 to just under $64,000.

Reported · Written up by our desk · Market Structure

Citadel is positioning for a surprise Federal Reserve rate hike on Wednesday, calling for a 25-basis-point move even as broad market expectations and many traditional and crypto analysts point to no change. The hedge fund argues the decision is more about timing and tactics than incoming data, with Chair Kevin Warsh seen as having a better shot at creating a lasting surprise before the market adjusts.

If the hike materializes, Citadel expects the Fed benchmark borrowing cost to rise into a 3.75% to 4% range, a shift it says could push Treasury yields higher and pressure risk assets, including bitcoin. The framework links tighter monetary conditions to a headwind for markets that have been sensitive to changes in rates, particularly as bitcoin has already cooled since recent highs.

The piece highlights that, although consensus favors unchanged rates, market pricing still assigns a meaningful probability to a move, citing CME Group’s FedWatch tool. It puts the odds of a rate increase at 35.8%, up from 25.7% a week earlier, as traders appear heavily positioned for the base case.

On the crypto side, the story notes that bitcoin’s upswing has stalled since last Wednesday, with prices pulling back to just under $64,000 from a peak of nearly $67,000. CoinDesk also quotes Kraken economist Thomas Perfumo saying the most likely July outcome is no change in interest rates, underscoring the tension between Citadel’s call and prevailing expectations.

Latest closeBitcoin $64,345.32 ▲0.7%

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