Bitcoin and Ethereum swung after the U.S. Federal Reserve raised interest rates by 25 basis points on September 16, the central bank’s first rate hike in over three years. Fed Chair Kevin Warsh said that policymakers remain focused on bringing inflation back under control.
The Federal Open Market Committee voted 12-0 to lift the federal funds target range to 3.75%-4%. This was the Fed’s first hike since July 2023, when the Powell-led central bank raised rates 25 basis points to 5.25%-5.5%.
Following the announcement, Bitcoin traded between roughly $75,000 and $76,500, before trading near $75,600 later in the session. Ether fluctuated between approximately $2,370 and $2,430, trading near the lower end of the range at $2,376, The Block reported.
Fed Signals Rates Could Rise Again
The rate rise was widely expected, but the Fed’s updated outlook delivered a more hawkish signal.
In his opening remarks, Warsh argued that the economy appears to be strengthening and financial conditions are not particularly tight.
He said, “I would be hard-pressed to describe broad financial conditions as restrictive. So we removed a dose of accommodation.”
The projections also point to further rate increases. Sixteen of 18 policymakers now project at least one additional 25-basis-point hike before the end of 2026.
The Fed’s decision contrasts with President Donald Trump’s earlier calls for the U.S. to have the world’s lowest interest rates.
According to the Federal Reserve projections, the median projection for headline PCE inflation in 2026 rose to 3.7% from 3.6% in June. Policymakers projected inflation would return to 2% in 2029.
Bitcoin Faces a Higher-for-Longer Rate Environment
Higher interest rates raise borrowing costs and can make interest-bearing investments more attractive relative to digital assets such as Bitcoin.
Ahead of the September 16 decision, CME FedWatch showed a 92% probability of a quarter-point rate increase.
Bitcoin’s relatively contained reaction suggests much of Wednesday’s move was already priced in.
The next key macro signals for Bitcoin and Ethereum include inflation data, energy prices, and any change in expectations for another Fed hike before year-end.
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