Crypto markets rally after Fed’s first rate hike in 3 years

The Federal Reserve on Wednesday approved its first interest rate increase in more than three years, raising its benchmark rate by 25 basis points to a target range of 3.75%-4.00%, yet cryptocurrency markets staged a broad and counterintuitive rally in the hours that followed. Bitcoin ↗ 0.53% reclaimed $76,000 on Thursday, while Ethereum ↗ 1.44% climbed above $2,400 and Zcash ↗ 9.47% surged more than 16% to new record highs, defying the conventional wisdom that rate hikes pressure non-yielding digital assets.cnbc+1

A "Buy the News" Reaction

The Federal Open Market Committee voted 12-0 to approve the hike, with Chair Kevin Warsh telling reporters that inflation had been "too high … for too long". But what reassured traders was the committee's dot plot forecast, which projected a median policy rate of 4.1% at the end of both 2026 and 2027 — implying just one further 25-basis-point move and no sustained tightening cycle. With markets having priced in the hike at above 90% probability on the CME FedWatch tool beforehand, the decision's arrival cleared an overhang of uncertainty rather than delivering a shock.fxstreet+2

Bitcoin rose roughly 0.9% over 24 hours to trade near $76,600, according to CoinDesk, while Ethereum added over 1% and Solana ↗ 2.64% gained 2%. Zcash was the standout performer, jumping more than 16% in 24 hours to trade above $1,360, extending a rally that has taken the privacy-focused token from under $50 a year ago to new all-time highs. Analysts pointed to surging trading volume and growing interest tied to a potential spot ETF filing by Grayscale ↗ 0.73% as catalysts for the move.coindesk+4

Clarity Act Fallout Still Lingers

The rebound followed a bruising sell-off earlier in the week after the U.S. Senate on Tuesday failed to advance the Clarity Act, a sweeping crypto regulatory bill that fell 10 votes short of the 60 needed to clear a procedural hurdle. The vote was 50-49, with four Republican senators joining all Democrats in opposition. The New York Times reported it was "a stinging defeat" that makes passage unlikely before November's midterm elections.nytimes+1

Bloomberg described the one-two punch of the bill's failure and the rate hike as a "double whammy" for an industry already contending with waning retail interest and tighter liquidity. But the panic proved short-lived. Once the Fed decision landed without hawkish surprises, sidelined capital and short-covering drove the recovery.tradingkey+1

What Comes Next

The total cryptocurrency market capitalization stood at $2.61 trillion on Thursday, according to CoinMarketCap data cited by Argaam. With the Fed signaling restraint and the Clarity Act's failure now priced in, traders are watching whether Bitcoin can hold $76,000 as support and potentially retest $80,000 through late September. The window for crypto legislation, however, appears to be closing. As Senator Cynthia Lummis's final pitch before the vote failed to sway enough colleagues, the industry's hopes for regulatory clarity from Washington have dimmed considerably.argaam+2