The Fed raised rates by 25 basis points on Wednesday, its first hike in over three years, and Bitcoin briefly dropped below $75,000 before recovering to around $76,400. The move revives comparisons with March 2022, when Bitcoin rallied roughly 18% after the Fed's first hike before falling about 50%, and analysts are split on whether history repeats.
BTC recovers after the Fed shock
Bitcoin and crypto markets turned volatile on Wednesday after the Federal Reserve raised interest rates by 25 basis points, lifting its target range to 3.75%-4%. The move was widely expected, but BTC still briefly dropped below $75,000 before recovering to around $76,400.
Analyst Doctor Profit dismissed the bearish reaction, arguing Bitcoin's bottom was already in at $57,000, and said he is holding the BTC he bought between $60,000 and $64,000 with no plans to sell. Ali Martinez, however, said he is prepared for another sell-off, identifying Bitcoin's Short-Term Holder Realized Price near $71,200 as a level he would treat as a potential accumulation zone if BTC falls further.
Echoes of the 2022 hiking cycle
Bitcoin peaked around $69,000 in November 2021 and was down roughly 40% when the Fed first raised rates in March 2022. Today, it sits around 40% below its October high of $126,000. Following the March 2022 hike, Bitcoin rallied roughly 18% over the following 12 days before subsequently falling around 50%, raising the possibility that a relief rally could again give way to a prolonged bear market. However, one comparable cycle offers limited evidence, and Bitcoin's 2022 decline coincided with losses across equities, bonds and metals, alongside turmoil within the crypto industry.
One more hike remains in focus
The Fed's benchmark range now stands at 3.75% to 4.00% in its first increase in more than three years. Markets are pricing in a further 75 basis points of tightening over the next six months. History suggests a single hike could be unlikely: since 1994, the Fed has gone "one and done" only once, and single increases are rare across the twelve tightening cycles since 1955.
Bitcoin was already facing pressure before the rate decision. Its price pulled back after the previous day's CLARITY Act setback, with ETF outflows, higher Treasury yields, and liquidations adding to the strain. The Fed's latest projections point to at least one more hike in 2026, keeping future policy decisions in focus for crypto traders.
Meanwhile, core inflation has eased to 2.4%, its lowest level in five years. Middle East tensions have pushed WTI and Brent crude above $100 a barrel, threatening to reignite inflation. The U.S. 10-year Treasury yield has climbed to 5%, adding further pressure to financial conditions and risk assets.
Sources: CoinDesk, CryptoPotato
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