Bitcoin becomes cheaper after Fed rate hike and market expectations revision

Bitcoin came under noticeable pressure ahead of and after the US Federal Reserve meeting. The main factor for the crypto market was not so much the US interest rate hike itself, but the change in expectations regarding the Fed's future policy and the rather hawkish rhetoric of the new Federal Reserve Chairman Kevin Warsh.

On September 16, 2026, the Fed raised its benchmark interest rate by 25 basis points to a range of 3.75–4.00% per annum. This is the first rate hike by the US central bank since 2023. The decision was expected by the market, so the main interest of investors was focused on Warsh's statements and the updated Fed projections.

Bitcoin began to fall even before the Fed's decision

By the time of the Fed meeting, Bitcoin was already in a correction phase. On the morning of September 16, BTC was trading around $75–76 thousand, having lost about 4% the previous day. In early September, Bitcoin had risen above $82 thousand, so the current correction has become quite noticeable.

Thus, the cryptocurrency market began to price in a tighter US monetary policy even before the official Fed decision.

An additional negative factor was the defeat in the US Senate of the CLARITY Act, which was supposed to create a clearer legislative framework for the digital asset market. After the vote on September 15, Bitcoin fell below $76 thousand, and significant volumes of long positions were liquidated in the market.

Why a rate hike is negative for Bitcoin

The mechanism here is quite simple. When the Fed raises rates, the yield on relatively safe dollar instruments increases. US government bonds become more attractive to investors, and the cost of money in the economy rises.

For Bitcoin, this creates several problems. First, part of the capital may flow from riskier assets into bonds and money market instruments.

Second, the high cost of borrowing reduces the availability of borrowed funds for investors and crypto market participants.

Third, rising US bond yields usually contribute to a stronger dollar. A strong dollar can also put additional pressure on assets quoted in the US currency.

That is why Bitcoin is traditionally considered an asset sensitive to changes in global liquidity and financial conditions.

The market already expected a rate hike

Here lies an important nuance of the current situation. The 0.25 percentage point rate hike did not come as a surprise. On the eve of the decision, the probability of such a step was estimated at about 92–95%. Consequently, much of the negative reaction may already have been priced into Bitcoin. Therefore, the much more important question for BTC became: what is the Fed going to do next?

If investors see the rate hike as a one-off measure followed by a pause, pressure on Bitcoin may be limited. However, if the Fed signals that it is ready to continue raising rates, the situation will be more difficult for the crypto market.

That is why Kevin Warsh's statements are now of great importance for Bitcoin.

Warsh became one of the main factors for the crypto market

Back in late August, speaking at the Jackson Hole symposium, Warsh sent a fairly hawkish signal to the market regarding inflation.

He pointed out that inflation remains too high and that the Fed needs to achieve a more timely return of inflation to the target level. These statements contributed to a rise in expectations of a rate hike in September.

For cryptocurrencies, this turned out to be an important signal. The Bitcoin market reacted quite quickly to the change in rate expectations. Before the Fed meeting, BTC had already fallen to about 75,000–76 000 dollars, demonstrating increased sensitivity to the prospect of further tightening of financial conditions.

The Fed allows for further rate hikes

After today's meeting, the situation has become even more interesting. The new Fed projections show that most members of the US central bank's leadership expect at least one more rate hike by the end of 2026. According to Reuters, 16 out of 18 Fed policymakers project at least one more 25 basis point hike. This means that today's decision may not be a one-off increase, but the start of a new cycle of monetary policy tightening.

For Bitcoin, this is potentially a more significant factor than today's 25 basis points. If the market begins to price in a rate above 4% and the maintenance of tight financial conditions for a longer period, pressure on crypto assets may intensify.