Passport Question Regarding Birth Certificates

Not sure where to best ask this, but hoping someone here will be more in the know - will the gender marker on passports be based on the "sex" indicated on a state birth certificate now even if that "sex" was changed and the record was sealed?

I'm in a luckily blue state and since mid last year have been getting state documents updated. I'm in the final hurdles still but once the marker is finally updated (hopefully next month) should I apply for a new passport? I unfortunately have a passport with the old marker, so I'm concerned if they will reject on that basis even when my birth certificate is updated or the record will be unsealed.

Any advice from people that are more aware of this process or the changes happening would be greatly appreciated!