CoinDesk
The Federal Reserve raised interest rates by 25 basis points to 3.75%-4.00% on Wednesday, its first hike since July 2023, but the crypto market shrugged. The FOMC's quarterly dot plot showed a median projected rate of 4.1% at the end of both 2026 and 2027, implying only one additional 25bp move in that window and no sustained tightening. Bitcoin rose 0.88% to $76,621 within an hour of the release, with 94 of the CoinDesk 100 constituents higher over 24 hours.
Why it matters
Chair Kevin Warsh told reporters inflation had been "too high … for too long," but the dot plot was the trade. The implied terminal rate and the lone 2027 hike frame the current stance as close to the peak rather than the start of a fresh tightening leg, which re-prices risk assets against a regime of rolling hikes. With one move left, the path of least resistance flattens.
Market impact
Risk assets moved with conviction. The Dollar Index slipped 0.17%, Nasdaq 100 futures gained 1.04%, S&P 500 futures 0.81%, gold 1.02% and silver 1.52%, while the two-year Treasury yield eased 2 basis points to 4.71% after touching its highest level since 2024 in the prior session. Crypto joined rather than led the move, a change from earlier in the week when the sector traded independently of equities.
Speculative names did the heaviest lifting. Zcash jumped 23% to a record near $1,369 after Paradigm co-founder Matt Huang disclosed on X that the firm holds ZEC and called it "a private complement to Bitcoin." ZEC futures open interest climbed 37.84% to $2.2 billion, with $28.9 million liquidated and a negative funding rate, a textbook short squeeze as shorts covered into the highs. CoinMarketCap's Altcoin Season index ticked up to 39/100 from 32.
Aggregate crypto futures open interest rose to $64.4 billion from $59.7 billion on Monday on $112.6 billion of 24-hour volume, with $214.3 million liquidated, evidence traders added exposure into the rally rather than covering shorts. Bitcoin funding sits at 0.0070% with the long/short ratio positive for eight straight days. The counterweight is the spot ETF tape: U.S.
Frequently asked questions
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What did the Federal Reserve decide on rates?
The FOMC lifted the target rate by 25 basis points to 3.75%-4.00%, its first hike since July 2023, with the decision announced Wednesday.
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Why did crypto rally despite the rate hike?
Markets focused on the dot plot's median 4.1% projection for 2026 and 2027, implying only one further 25bp move and no sustained tightening cycle, which read as a near-terminal stance.
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What happened to Bitcoin after the decision?
Bitcoin rose 0.88% to $76,621, with 94 of the CoinDesk 100 constituents higher over 24 hours, though it remained 6.9% below its $82,284 monthly high from Sept. 4.
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Why did Zcash hit a record high?
ZEC climbed 23% to around $1,369 after Paradigm co-founder Matt Huang disclosed on X that the firm holds ZEC and called it "a private complement to Bitcoin," sparking a 37.84% surge in futures open interest and a short squeeze.
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What were spot Bitcoin ETFs doing during the rally?
U.S. spot bitcoin ETFs shed $295.98 million on Wednesday after losing $450.33 million the day before, taking seven-session outflows past $1 billion since Sept. 8 and pushing total net assets down to $95.19 billion.
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