Resilient Crypto: Why Bitcoin Bounced Back Despite Rate Hikes & Regulatory Stalls

VettaFi Head of Sector and Industry Research Roxanna Islam appeared September 21 on Bloomberg TV to discuss the bitcoin rally despite an interest rate hike from the Federal Reserve and the stalling of the CLARITY Act, among other topics.

• Bitcoin surged to $85,222, brushing off a recent Fed rate hike and regulatory stalls.
• Increased Treasury buybacks revived the “debasement trade,” fueling the broader crypto rally.
• Fixed income ETFs hit an unprecedented $446 billion in inflows as investors chase 5% yields.

Bitcoin, the world’s largest crypto, shot up to an eight-month high on September 21, climbing 5.1% to $85,222 due to an improved risk sentiment boosted by the markets. “The Fed rate hike and the CLARITY Act not being able to move forward are two big events that should have been potential headwinds, but bitcoin actually reacted quite resiliently over the last week and over the last few days”, said Islam.

Islam noted that bitcoin prices did go down to around $75,000 at some point, but were able to bounce back to $80,000 by the end of the week. This aggressive rise in price follows a broader rebound from the low $60,000s earlier in the month.

Bitcoin was not the only gainer during this rally. Ethereum, the second-largest cryptocurrency, also jumped by more than 4.3% to $2,747 and ether shot up 5.94% to $2,725.66 on September 21.