Wash's First Shot: How Fed Rate Hikes Reshape Crypto Market Pricing?

Cryptocurrencies, assets highly sensitive to liquidity, are entering a new phase of adapting to a long-term high interest rate environment.

Written by: Ashrith Rao

Translated by: Chopper, Foresight News

Yesterday, the Federal Open Market Committee (FOMC) announced an increase in the target range for the federal funds rate by 25 basis points to 3.75%-4.00%. The resolution passed unanimously, with Federal Reserve Chair Kevin Warsh taking a firm stance. This marks the Fed's first rate hike since July 2023, and Warsh's first policy action since assuming the chairmanship.

The dot plot shows that 16 of the 18 committee members expect one more rate hike before the end of 2026.

The crypto market itself was not surprised by the rate hike decision. According to CME FedWatch data, prior to the announcement, the market implied probability of a 25-basis-point hike stood at approximately 92%.

What truly sent signals was Warsh's speech and his hawkish policy stance.

Warsh stated at the press conference: "I find it difficult to believe that the overall financial conditions are currently restrictive. Therefore, we have withdrawn some accommodation." In other words, the Fed believes the current policy rate is still not high enough.