The Federal Reserve raised its benchmark rate by 25 basis points to a range of 3.75% to 4% on Wednesday, marking its first rate hike since July 2023. All 12 Federal Open Market Committee members backed the move, which traders had priced in at a 93% probability ahead of the decision.
Bitcoin briefly touched $76,499 following the announcement before settling near $76,300 on Thursday, largely flat on the day. The broader crypto market capitalization stood at $2.63 trillion, with the Crypto Fear and Greed Index reading 50, indicating neutral sentiment.
Traditional markets showed a sharper reaction to the rate decision. The Dow declined approximately 1.2% and the S&P 500 slid 0.4% to 0.5% on Wednesday. The 10-year Treasury yield topped 5% earlier in the week, its highest level since 2007, while oil pushed above $100 a barrel.
By Thursday morning, some of this pressure eased. Long-end Treasury yields dropped roughly two basis points and equity futures turned higher after comments from Fed Chair Kevin Warsh reassured bond markets. Oil also retreated slightly from its highs.
Higher interest rates typically make Treasury securities and cash more attractive relative to assets like Bitcoin and gold that generate no yield. A hawkish rate increase can also strengthen the dollar, creating headwinds for risk assets broadly.
Zcash Breaks from the Pack
Zcash stood out among major cryptocurrencies, surging as much as 23% to trade near $1,425, a multi-year high. The rally followed a disclosure by Paradigm co-founder Matt Huang that his venture firm holds ZEC and has invested in the Zcash Open Development Lab. Huang described Zcash as a private complement to Bitcoin and cited emerging cyber threats and quantum computing advances as reasons for supporting the project's developer fund.
Over the past month, ZEC has gained approximately 160% compared with Bitcoin's 18.2% climb, making it the standout performer among the top 10 cryptocurrencies by market cap for the week.
Other Major Cryptocurrencies
Gains were more modest elsewhere. BNB traded near $724 with a 2% increase, while Solana held just above $100 for a 3.3% gain. XRP lagged at $1.29, up 2% for the day but down more than 6% for the week following the failure of the crypto sector's Clarity Act to advance in a Senate cloture vote.
Roughly $373 million in crypto liquidations occurred over 24 hours, with short positions accounting for the larger share as prices moved higher into the rate decision.
The Federal Reserve's median projection places the federal funds rate at 4.1% by the end of 2026, leaving room for one additional quarter-point move. The Fed's next meeting is scheduled for October 27-28.
