Fed Hikes, Bitcoin Shrugs: $BTC Cracks $76K While Powell's Replacement Says Inflation "The Problem" 🪙

The U.S. Federal Reserve raised its benchmark federal funds rate by 25 basis points to a target range of 3.75%–4.00% on Wednesday, the central bank's first rate hike since July 2023. The Federal Open Market Committee voted unanimously, with all 12 members backing the move, placing pressure on Federal Reserve Chair Kevin Warsh to tighten policy against the wishes of President Donald Trump, who told reporters last year before nominating Warsh, "I'm going to put somebody that wants to cut rates." Warsh did not respond when asked about Trump's reaction to the decision, repeating instead the line he used at his Jackson Hole keynote in August: "We will deliver price stability. We're committed to a discipline, not a decision."

The Fed's updated dot plot showed a median policy rate of 4.1% at the end of both 2026 and 2027, implying just one further 25-basis-point move and no sustained tightening cycle, which traders read as a ceiling on the hiking path. Warsh told reporters at his post-meeting press conference that "the economy has indeed strengthened" and "inflation is the problem," noting that headline inflation has remained above 2% for over five years while core inflation has eased to 2.4%, its lowest level in five years. He characterized inflation as "too high … for too long" and said recent readings did not suggest underlying trends had meaningfully improved. On artificial intelligence, Warsh drew a line around the Fed's role, saying he had "spent a lot of time thinking about AI" but that "the policy decisions on AI are made by other parts of government," adding that the central bank cares "much about the implications on the demand side of the economy."

Markets had largely priced in the hike. CME's FedWatch tool showed a 93% chance of a 25-basis-point move heading into the decision, up from under 50% a month earlier, with Goldman Sachs and Piper Sandler switching to expect a hike after hot August inflation data. The Producer Price Index rose 5.4% annually in August, accelerating from 4.8% in July, with goods prices up 1.1% on the month, more than three-quarters of that gain coming from rising energy costs according to the National Association of Manufacturers. A day later, the Consumer Price Index rose 3.4% annually, matching July's pace, while the monthly gain accelerated to 0.4% from 0.1%, with gasoline responsible for a third of the increase and core inflation picking up to 0.3% monthly from 0.2%. Oil has traded above $100 a barrel since July amid fallout from the U.S. conflict with Iran, and the U.S. 10-year Treasury yield has climbed to 5%.

Bitcoin ($BTC) was little changed ahead of the announcement, swinging between $75,000 and $75,800, before briefly spiking to $76,000 and stabilizing at $76,621 by Thursday, a gain of 0.60% since midnight UTC and 0.88% over 24 hours. Ether ($ETH) added 1.1% to $2,444.36 and Solana ($SOL) rose 2% to $100.57, while the broader crypto market was mixed, with XRP dropping more than 2% and Zcash ($ZEC) climbing 23% to a record near $1,369 after Paradigm co-founder Matt Huang disclosed the firm owns ZEC. Total crypto market value excluding stablecoins stood at roughly $2.29 trillion, up 0.8% over 24 hours.

Risk assets joined the relief move, with the Dollar Index down 0.17%, Nasdaq 100 index futures gaining 1.04%, S&P 500 futures 0.81%, gold 1.02% and silver 1.52%, while the two-year Treasury yield slipped 2 basis points to 4.71% after touching its highest level since 2024 in the prior session. Ninety-four of the CoinDesk 100 constituents were higher over 24 hours, with the small-cap CoinDesk 80 up 4.7% against 1.2% for the CoinDesk 5, though U.S. spot bitcoin ETFs shed $295.98 million on Wednesday after losing $450.33 million the day before, bringing the running total since Sept. 8 to more than $1 billion across seven sessions and total net assets to $95.19 billion per SoSoValue. Aggregate open interest across crypto futures climbed to $64.4 billion from $59.7 billion on Monday on $112.6 billion of 24-hour volume, with $214.3 million liquidated over the past day according to Coinalyze, while Bitcoin remains 6.9% below the $82,284 monthly high it set on Sept. 4.