The Federal Reserve resumed raising interest rates after a pause of more than three years. On September 16, the Federal Open Market Committee voted unanimously, 12-0, to raise the federal funds target range by 25 basis points to 3.75%-4%. Bitcoin and Ether initially fell and rebounded after the decision before trading back and forth within ranges, as market attention shifted from the rate increase itself to whether further tightening is likely.
Bitcoin fluctuates near $75,000
After the decision, Bitcoin moved between roughly $75,000 and $76,500. At the time of publication, it was trading near $75,600, compared with an intraday reference price of $76,004.54. Ether fluctuated between about $2,370 and $2,430 before moving closer to the lower end of that range. It was trading near $2,376, against an intraday reference price of $2,406.67.
The increase marked the Fed's first rate hike since July 2023, when it raised rates by 25 basis points to a range of 5.25%-5.5%. Ahead of the latest meeting, CME FedWatch data showed traders had at one point assigned a 92% probability to a 25-basis-point increase, down from about 96% the previous day. The decision therefore did not come as a complete surprise to the market.
Because the rate move had already been priced in, the announcement produced no sustained one-way reaction. Crypto assets nevertheless remained substantially more volatile than traditional equities. Lewis Huang, an analyst at Bitget, said Bitcoin's trading range on the previous two FOMC decision days was about four times that of the S&P 500. That suggests changes in interest-rate expectations can be reflected more quickly and more sharply in crypto markets.
Warsh says financial conditions are not tight
In his opening remarks after the meeting, Fed Chair Warsh said the U.S. economy appeared to be strengthening and that overall financial conditions were not particularly tight. He said it was difficult to characterize broad financial conditions as restrictive, adding that the committee had therefore withdrawn some of the policy support it had previously provided.
The policy projections also showed that additional rate increases remained under consideration. Sixteen of the 18 policymakers expected at least one more 25-basis-point increase this year. For crypto markets, that keeps real interest rates, dollar liquidity and the potential impact on risk-asset valuations in focus rather than leaving attention on the single decision alone.
Huang said energy prices could create a new test for the Fed's policy path. He noted that gasoline prices had risen nearly 4% in a month, while diesel prices had climbed 60% to a record high. If the inflationary impact of energy prices fades relatively quickly, the Fed could still continue tightening after the initial shock weakens, adding to concerns about the delayed effects of monetary policy.
XRP, Solana and Zcash outperform major assets
Other large cryptocurrencies showed a generally limited immediate response to the meeting. Most of the top 20 tokens by market capitalization were little changed or gained about 0.5%. XRP rose approximately 1.5% to around $1.30, while Solana gained about 1% to roughly $98.075.
Privacy-focused cryptocurrency Zcash performed more strongly, gaining about 6.5% to approximately $1,288.91. The divergence among tokens indicated that funds were not moving uniformly into or out of crypto after the rate announcement, but were instead continuing to rotate between assets. Near-term prices will remain sensitive to upcoming inflation data, changes in energy costs and the Fed's guidance on its next rate increase.