Bitcoin's Recovery Hopes Dashed by Rate Hike Decision

Bitcoin's price has been declining since September 4th, losing key levels at $80k and $76k on Tuesday, September 15th. The market reacted to increased odds of a Federal Reserve rate hike decision, leading to a risk-off sentiment due to rising inflation and tightening liquidity conditions.

Investors need to pay attention to the first rate hike since 2023, as it may be only the beginning of another quantitative tightening cycle. Projections show that the Personal Consumption Expenditures inflation will remain at 3.7% in 2026 and not return to the 2% target until 2029.

According to Santiment, traders were 'overwhelmingly prepared for exactly what happened' with this rate hike, but the isolated decision was not a big worry for them. However, another hike later this year would matter more than the latest rate hike, and if inflation remains stubbornly high and oil prices remain elevated, Bitcoin and altcoin markets will face a difficult time.

The Bitcoin Bull Score Index fell into bearish territory with a score of under 40, and short-term holders are sending BTC to exchanges at a loss. Demand is not showing up, noted crypto analyst Darkfost, as the S&P and Nasdaq fell by 0.8% after the rate hike news.