Bitcoin Holds Steady as Fed Raises Interest Rates for First Time in Over Three Years

The Federal Reserve raised interest rates by 25 basis points on September 16, lifting the target range to 3.75-4.00%. This marks the first rate increase in over three years and a reversal of the cuts that started in late 2025. Bitcoin responded surprisingly well, holding steady near $76,045.

According to Fed Chair Kevin Warsh, the decision was made to ensure underlying inflation is moving towards the 2% target at sufficient speed. US inflation sits at 3.4% year-over-year, with oil prices above $106 per barrel contributing to higher energy costs.

The market had largely priced in the rate hike before the announcement, and institutional investors' demand for spot Bitcoin ETFs provided a structural floor that cushioned the impact. The ETFs held approximately $99 billion in assets as of August 2026, with inflows reaching $3.52 billion across 16 trading days.

While Bitcoin's price remained stable, the leveraged side of the market saw significant liquidations, with 86,565 traders losing around $327.84 million within 24 hours of the rate decision. This highlights the distinction between the spot and derivatives markets, with the former anchored by ETF demand and the latter characterized by speculation and leverage.