Bitcoin Defies Rate Hike Expectations with Swift Rebound

The Federal Reserve raised interest rates by 25 bps for the first time in over three years on September 16, but Bitcoin surprisingly shrugged off the loss and rebounded to turn a profit.

This move would typically be bearish for risk-on assets like BTC, especially with a unanimous vote among policymakers. However, after dipping initially, the cryptocurrency quickly regained its losses and is now in the green.

Nicolai Sondergaard, Senior Research Analyst at Nansen, pointed out that the regulatory setback from the CLARITY Act produced more significant volatility for BTC than the Fed's rate hike, which held better than higher-beta assets like ETH and SOL.

Iliya Kalchev, analyst at Nexo Dispatch, noted that markets had assigned a 90%+ probability to the 25-basis-point hike ahead of the meeting, leaving little room for surprise. He also cited data from SoSoValue showing $450 million in net outflows from spot BTC ETFs on September 15 and $296 million a day later, indicating the CLARITY Act setback was more profound.

Kalchev believes that Treasury yields are now a major test for BTC, as the 10-year yield recently jumped past 5%, making government debt competitive with risk assets. However, he sees inflation, employment, and Treasury yields as more important than the Fed meeting itself, predicting that if inflation cools and yields stabilize, pressure on BTC will ease.