Deep Dive: Fed Hikes For First Time Since 2023, Crypto Faces Its Liquidity Test

For the first time since July 2023, the Federal Reserve has raised interest rates. The FOMC voted unanimously September 16th to increase its target range by 25 basis points, from 3.50%-3.75% to 3.75%-4.00%. That ends a roughly 38-month stretch without a rate hike and formally puts monetary tightening back on the table.

For crypto, the hike itself may not be the most important development. Traders had days to prepare for it, and markets were already heavily positioned for a quarter-point increase. The bigger question is whether September represents one isolated adjustment or the beginning of another sustained tightening cycle. That distinction could have a much larger impact on Bitcoin, altcoins, equities, bonds, and the dollar through the end of 2026.

The Fed’s reasoning was straightforward. Economic activity remains solid, employment has held up, and inflation is still running too hot. Policymakers now project 2026 PCE inflation at 3.7%, while the central bank does not expect inflation to return fully to its 2% objective until 2029.

That made September’s decision much less shocking than the headline suggests. Rate markets had placed more than a 90% probability on a quarter-point hike shortly before the announcement. Prediction markets were nearly as convinced, with Kalshi around 87% and Polymarket around 88%. In other words, traders were overwhelmingly prepared for exactly what happened.