September 17, 2026
The Federal Reserve’s 25 basis-point hike in the benchmark interest rate on Wednesday to 3.75-4.00% is unlikely to drive major changes in crypto markets, in our view. Why? Because we interpret yesterday’s move as a mid-cycle adjustment, not a cyclical swing in official policy.
In March 2022, the Fed embarked on a cyclical change in monetary policy to contain inflation, raising the fed funds rates by 550 basis points by July 2023. This move probably weighed on the price of Bitcoin and other digital assets during the last bear market because it meaningfully affected the opportunity cost of holding non-interest-bearing assets like Bitcoin.
But that’s not what happened on Wednesday. We believe yesterday’s move was a mid-cycle adjustment, not a cyclical change. And we doubt the one or two rate hikes expected for 2026 will lead to much change in capital allocation. The Greenspan Fed did an analogous one-off hike in March 1997, and the Nasdaq bull market kept rolling on (Exhibit 1).
There could be a bigger impact on specific pockets of the digital asset ecosystem. For example, stablecoin issuers like Circle and Tether earn higher revenues when cash interest rates move up. Higher rates on tokenized bonds and money market funds could also drive flows in onchain capital. Crypto is diverse, and higher rates affect certain assets differently than others, just like in traditional finance.
Key Takeaway: The Fed 25-basis-point rate hike on Wednesday—and a potential second hike still this year—are unlikely to drive major shifts in digital asset markets, in our view.
Exhibit 1: The Fed’s mid-cycle rate adjustment in 1997 had little bearing on markets
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