Fed rate-hike odds hit 37% from 10% last week, sending Bitcoin and Nvidia lower. Senate delay on the CLARITY Act added to crypto pressure. The Fed decision is Wednesday.
The crypto market lost 2.8% in the past 24 hours, falling to $2.24 trillion as Bitcoin and Ethereum led the decline. Bitcoin dropped about 2.7% to $63,400. Ethereum fell more than 3.2% to $1,874.
The sell-off hit stocks just as hard. South Korea's KOSPI index plunged 10%. Nvidia shares dropped around 5%.
Traders pointed to one catalyst above others: the Federal Reserve. Odds of a 25-basis-point rate hike at the next FOMC meeting climbed to 37% on the CME Fed Watch tool, up from roughly 10% a week ago. Higher rates tend to push investors out of risk assets and into safer yield-bearing instruments, several traders said.
The rate-hike repricing spread through technology and semiconductor stocks first. South Korea's KOSPI fell more than 10%, with Samsung and SK Hynix facing heavy selling. The weakness raised fresh questions about whether the global AI investment boom had moved too fast. Investors poured huge sums into AI infrastructure, but the market is now asking how quickly those investments will generate returns, analysts said.
That pressure reached U.S. markets. Nvidia fell around 5%. Other AI-linked stocks came under similar pressure.
Crypto faced a separate setback. The U.S. Senate postponed work on the CLARITY Act, a bill designed to create clearer rules for digital assets. The delay reduced hopes for quick regulatory progress, adding another concern for institutional investors.
The bigger pressure came from Fed uncertainty and the broader decline in technology and risk assets, traders said. The market is now waiting for the Fed's decision, with investors watching for any signal about future interest rates.
A surprise hike or a strongly hawkish message could put more pressure on Bitcoin and high-risk stocks. A rate hold with a softer outlook could ease selling pressure and trigger a relief rally, traders said.
The Fed's next policy statement is due Wednesday.
Drafted by a large language model from the source reporting linked above, then screened by automated publishing checks. It is not read by a journalist before publication. Some articles cite our Alpha Score. Verify prices and figures against the original source. Educational coverage, not personalized advice.