Fed's first rate hike since 2023 fails to dent bitcoin
Macro & Markets ·
The Federal Reserve lifted its target rate 25 basis points to 3.75%–4%, its first increase since July 2023, and bitcoin dipped only briefly before recovering.
The Federal Open Market Committee's move pushed the rate range to 3.75%–4%, with Bitcoin sliding to $75,700 before climbing back to $76,400 as the market absorbed the decision, according to coindesk.com. Traders appeared reassured less by the hike itself than by the Fed's projections, which implied only one further move through 2027 rather than a sustained tightening path.
CME FedWatch data now shows a 49.6% probability of a cumulative 25bp hike by December, against 37.2% odds on a 50bp increase, suggesting the market has not fully settled on the pace of further tightening. That split leaves October and December policy meetings as the next points where crypto liquidity conditions could shift, even though this particular hike was absorbed without lasting damage to bitcoin's price.
A separate account of the same event framed bitcoin's rise after the hike as evidence that monetary policy is no longer the dominant driver of crypto price action, arguing that regulatory setbacks — such as the failed CLARITY Act — have had a greater market impact than the Fed's rate decisions, a view laid out at cryptopotato.com. That interpretation aligns with the muted, brief nature of bitcoin's dip to $75,700 despite the first rate increase in over two years.
The immediate market reaction extended beyond bitcoin, with risk assets broadly rallying and the dollar softening as the Fed's rate guidance was read as less hawkish than feared. Still, the hike itself represents a shift from the prior monetary stance, and the market's calm response leaves open whether sentiment would hold if the Fed moves toward the higher end of the 37.2% probability band for a 50bp increase by year-end.
What remains unresolved is how crypto liquidity would respond if the Fed's actual December move diverges from the roughly even odds currently priced between a 25bp and 50bp cumulative hike, and whether regulatory developments continue to outweigh monetary policy as the primary driver of bitcoin's price, a dynamic already flagged as market participants weigh the next two policy meetings.