Rate Hike Surprise Priced In, But Market Positioning Tells Conflicting Story
Prediction market traders have pushed odds of a July Fed rate hike to 27% on both Polymarket and Myriad, a meaningful double-digit jump in the last 24 hours. This signals material repricing of monetary policy expectations ahead of the FOMC decision this week. However, crypto market positioning paints a more hesitant picture: bitcoin options traders have collapsed hedges, with the put/call ratio falling from 0.76 in late June to 0.52, suggesting they're betting on a quiet week despite the rate-hike speculation.
Bitcoin ETFs experienced a reversal that underscores institutional caution. Over $475 million was redeemed from American bitcoin spot ETFs on Thursday and Friday last week, ending a seven-day winning streak according to Farside Investors data. This outflow coincides with the broader tightening of downside protection in options markets, pointing to genuine uncertainty about macro outcomes rather than conviction in either direction.
