Bitcoin prices rose following the Federal Reserve's first interest rate increase since 2023, defying the standard expectation that tighter monetary policy would depress risk assets. The central bank raised rates by a quarter point on Wednesday, yet the cryptocurrency climbed in the hours following the decision. Market participants had largely priced in the move, reducing the shock of the announcement.
Interest rate futures indicated a 92.7% probability of a hike just hours before the Federal Open Market Committee decision, according to BeInCrypto. This high level of anticipation meant traders had adjusted their positions well in advance. Consequently, the immediate market reaction was muted. Bitcoin initially dropped to approximately $75,350 shortly before the decision was announced. Within minutes of the release, the price jumped past $76,100. It reached a high of $76,500 after US markets closed before settling near $76,138.
Scott Melker, host of Yahoo Finance's Daily Wolf, suggested that a credible, one-time hike could stabilize long-term yields rather than spooking investors. He noted that this outcome depended on Federal Reserve Chair Kevin Warsh avoiding signals of a prolonged tightening cycle. The committee's decision passed by a unanimous 12-0 vote, with the accompanying statement maintaining a measured tone. However, updated projections show that 16 of 18 officials now expect another hike before the end of the year, a sharp increase from nine officials in June.
Gold exhibited a similar trading pattern during this period. Spot prices spiked toward $4,360 immediately after the release but subsequently sold off to settle between $4,280 and $4,300. This price movement suggests quick profit-taking rather than broad market alarm. Research on previous Federal Reserve cycles indicates that traders who adjust positions before an announcement often show little reaction to the actual decision, sometimes even seeing prices bounce higher.
Other factors influenced crypto prices this week beyond Federal Reserve actions. Bitcoin and XRP had already been sliding following the failure of the CLARITY Act in the Senate. This bill was intended to determine which federal regulator would oversee digital assets. The legislative setback resulted in more than $300 million in leveraged positions being wiped out. Additionally, Bitcoin and Ether ETFs recorded combined withdrawals of $592 million on September 15, marking their worst single day of outflows in months.
The broader top-10 cryptocurrency market remained mixed rather than uniformly bullish. Zcash rallied more than 20% over seven days while XRP declined, illustrating that specific narratives for individual altcoins can override general macroeconomic conditions. With 16 policymakers still anticipating another hike this year, the next significant test for crypto may depend less on the Federal Reserve's next meeting and more on whether the CLARITY Act debate resumes.