Federal Reserve raises rates by 25 basis points in first hike in 3+ years, triggering volatility in Bitcoin and Ether.
Macro & Markets ·
The Federal Reserve increased its benchmark interest rate by 25 basis points to a 3.75% to 4% range on Wednesday, marking its first rate adjustment since 2023. Market participants had assigned a 93% probability to this move, and all 12 members of the Federal Open Market Committee supported the decision. Bitcoin initially remained relatively stable around $75,000–$75,800 immediately surrounding the announcement, then climbed toward $76,000 in the aftermath, while the broader crypto market declined roughly 2.18% over the session.
The decision followed a sharp reversal in inflation expectations. After the Producer Price Index jumped to 5.4% annually and the Consumer Price Index's monthly component accelerated to 0.4%, several major institutions—including Goldman Sachs and Piper Sandler—shifted their forecasts to expect tightening. Oil prices surging above $100 per barrel for the first time since July added weight to the case. The committee cited solid economic expansion and persistent inflation, stating the move would support a faster approach to its 2% inflation goal.
The result presents a notable tension: recent market surveys showed most major banks anticipating an additional 50 to 75 basis points of tightening before year-end. Whether Bitcoin's brief price recovery reflects genuine bullish repricing or remains temporary remains unresolved, as does the durability of the crypto market's broader weakness on the day.