Fed Rate Hike Sparks Downward Pressure on Crypto Markets

The Federal Reserve has raised its benchmark interest rate by 25 basis points to 3.75%-4%, marking the first increase since July 2023.

All 12 voting FOMC members supported the decision, which was largely anticipated by markets. The immediate reaction across risk assets remained relatively contained due to this anticipation.

However, a more significant signal came through in the Fed's updated economic projections. Sixteen of 18 policymakers now expect another 25-basis-point increase during 2026, with the median projection placing rates at 4%-4.25% by year-end and keeping them there through 2027.

The central bank also raised its 2026 inflation forecast to 3.7%, which increased downside pressure on crypto markets. As a result, Bitcoin slipped in value due to the hawkish outlook and potential negative impacts for DeFi, CEX lending, and token performance.