The first Fed rate hike in over three years didnt bring BTC down for long.
After the CLARITY Act setback witnessed on September 15, all financial eyes turned to the Fed a day later when the US central bank raised the key interest rates by 25 bps for the first time in over three years.
This development is considered bearish for risk-on assets like BTC, especially when it came with a 12-0 vote by policymakers, and the cryptocurrency‘s price dipped after it became official. However, bitcoin rebounded swiftly, recovered the losses, and is actually велл in the green after the Fed’s move. Whats up with that？
BTC Shrugs Off a Rate Hike
The US Senates failure of the CLARITY Act pushed BTC to a multi-week low of $75,000, and the market anticipated another leg down if the Fed indeed hiked rates as expected on September 16. Although there was indeed a minor pullback, BTC shrugged off the losses almost immediately and turned them into gains as the week progressed.
Nansen Senior Research Analyst Nicolai Sondergaard explained that the regulatory setback produced more significant volatility than the Fed for BTC, which held better than higher-beta assets like ETH and SOL.
“Bitcoin rose on the day the Federal Reserve delivered its first interest rate hike in three years,” said Nexo Dispatch analyst Iliya Kalchev, adding that the move would ordinarily be expected to hurt a non-yielding asset. However, markets had assigned the 25-basis-point hike roughly a 90%+ probability ahead of the meeting, leaving little room for a surprise once the Fed actually made it official.
Citing data from SoSoValue, Kalchev added that the spot BTC ETFs recorded approximately $450 million in net outflows on September 15 and $296 million a day later. This shows that the CLARITY Act setback was more profound than the Feds move.
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The major test now is likely to be the Treasury yields, as the 10-year yield recently jumped past 5%, making government debt highly competitive with risk assets such as bitcoin. However, Kalchev argued that BTCs growing correlation with gold and its weakening relationship with Nasdaq could indicate that investors are increasingly viewing it through a monetary and fiscal lens rather than simply as a leveraged technology trade.
From this point forward, he sees inflation, employment, and Treasury yields as more important than the Fed meeting itself. If inflation cools and yields stabilize, pressure on the largest cryptocurrency will likely ease. However, if the opposite scenario continues, bitcoins resilience will face another tough test.