Federal Reserve Rate Hike Surprise Looms as Crypto Markets Hold Breathing

Citadel, one of the largest hedge funds in the U.S., is betting that the Federal Reserve will hike interest rates on Wednesday. The fund's head of macro strategy, Frank Flight, believes a 25-basis-point rate increase would send a strong signal to markets and force them to price assets based on data rather than expectations.

Citadel's call comes as both traditional and crypto market analysts expect no change in interest rates. However, the CME Group's FedWatch tool shows that the odds of a rate hike are at 35.8%, up from 25.7% just a week earlier.

The tension between these two views is causing markets to be cautious, with bitcoin prices pulling back to just under $64,000 after reaching nearly $67,000 last Wednesday. The Fed's decision on interest rates could have significant implications for risk assets, including crypto and Treasury yields.