Central Banks Hike Rates, Crypto Takes a Hit
Major central banks have begun to hike interest rates after a prolonged period of rate cuts that fueled one of the most aggressive crypto rallies in history. The European Central Bank (ECB) was the first to move, raising its deposit facility rate by 25 basis points to 2.25% on June 11, 2026. This marked its first interest rate increase since 2023.
The catalyst for the hike was persistent inflation driven by geopolitical tensions and oil markets, with crude prices pushing past $88 per barrel in July. The ECB's governing council decided that standing pat was no longer an option.
Other central banks followed suit, with the Reserve Bank of Australia raising rates multiple times in 2026 and the Bank of Japan pushing its policy rate to 1.0% in June. The Federal Reserve held its federal funds rate steady at 3.50%-3.75% through both June and July, but nine out of nineteen policymakers projected at least one rate hike by the end of the year.
Crypto assets have felt the impact of these changes, with Bitcoin shedding roughly 52% of its value since late 2025. It peaked near $126K at the end of 2025 and fell to around $60K by mid-2026 before stabilizing slightly in July. Other assets like Ether, Solana, and XRP also showed heightened sensitivity to central bank communications.