Fed Hikes Interest Rates, Crypto Market Prices Under Pressure

The Federal Open Market Committee (FOMC) has announced a 25-basis-point increase in the target range for the federal funds rate to 3.75%-4.00%, marking its first rate hike since July 2023.

Fed Chair Kevin Warsh took a firm stance, removing language that attributed rising inflation to 'supply shocks, particularly energy supply shocks,' indicating a shift in the Fed's judgment regarding inflation.

Cryptocurrencies, which are highly sensitive to liquidity, are adapting to this new high-interest rate environment. The market had already priced in expectations for higher long-end rates, and the rate hike merely confirmed this expectation.

The 10-year US Treasury yield has touched a new high of 5.04%, setting a precedent for an extended period at unacceptably high levels. This may suppress cryptocurrency prices further as risk-free rates approach 5%.