Analysis: Bitcoin shows relatively independent price action ahead of the Fed decision, with weakened correlation to the dollar index and US stocks.

September 16 — Bitcoin moved in a relatively independent pattern ahead of the Federal Reserve's interest rate decision, with its short-term correlation to the U.S. dollar index and U.S. equities dropping significantly. Alice Liu, head of research at CoinMarketCap, said Bitcoin's short-term correlation coefficient with the U.S. dollar index fell to 0.08, compared with -0.54 over the past 30 days; its correlation coefficients with the S&P 500 and Nasdaq dropped to 0.43 and 0.30, respectively, versus 0.75 and 0.60 the previous day.

Liu believes the market recently shifted its attention to the CLARITY Act, which failed to clear a key Senate procedural vote on Tuesday, allowing regulatory developments to temporarily overshadow macroeconomic factors. As correlations weaken, the strategy of hedging Bitcoin long exposure by shorting S&P 500 index futures is currently less reliable.

The market widely expects the Fed to raise rates by 25 basis points, a scenario that is largely priced in. This decision will test whether Bitcoin can re-establish its linkage with the dollar and U.S. equities; traders also need to watch post-meeting guidance and U.S. Treasury yield volatility, which, if it rises markedly, could tighten financial conditions and drive safe-haven flows in the crypto market.