Bitcoin price prediction: Why BTC USD can drop before a Fed rate hike and rally after

can dip before a Fed rate hike, followed by a rebound, that scenario unfolded in September 2026 when the crypto came under pressure as traders wagered on tighter monetary policy before rebounding after Fed hiked interest rates.

The seemingly conflicting move is a reflection of how markets react to expectations. Often investors are moving before an official announcement. Meaning some of the expected impact may already be reflected in prices by the time the decision arrives.

Why Rising Interest Rates Could Weigh on Bitcoin (BTC USD)

Bitcoin does not give any interest or dividends. It relies on its price rising to make a return on it which can make it less attractive when traditional investments give a higher yield

Treasury bonds, savings accounts and certificates of deposit can provide interest income. When interest rates rise, these alternatives can become more appealing to investors weighing where to put their money.

Bitcoin has also tended to behave like a risk-sensitive asset rather than a dependable hedge against market turmoil. Former Federal Reserve Vice Chair Lael Brainard discussed the correlation between crypto assets, riskier stocks and broader investor risk appetite in a speech on cryptocurrency and financial stability, as per MoneyLion report.