Bitcoin, Ethereum, and XRP managed to avoid a fresh sell-off after the Federal Reserve raised its benchmark interest rate by 25 basis points, bringing the target range to 3.75%–4.00%. The move marked the central bank’s first rate hike since 2023, and came as the Fed cited sustained inflation pressures amid ongoing economic growth.
Market reaction remains restrained
Immediately after the announcement, Bitcoin briefly climbed but soon stabilized close to $76,000. Ethereum traded around $2,400, while XRP held near $1.28. The measured response from crypto markets followed a turbulent week, which saw Bitcoin drop below $75,000 in the wake of the failed CLARITY Act and a fresh round of leveraged position liquidations.
In the previous 24 hours, over $455 million in leveraged crypto positions were liquidated. U.S. spot Bitcoin ETFs posted net outflows of approximately $450 million, and Ethereum ETFs also recorded notable withdrawals.
Analysts noted that much of the earlier volatility had already been absorbed by markets ahead of the Fed’s decision. Traders had shifted expectations toward a quarter-point rate hike, dulling the impact of the move itself.
Bitcoin rebounded slightly after the rate decision but settled quickly as markets digested both the Federal Reserve’s actions and the earlier deleveraging across the crypto space.
Regulatory setbacks and liquidations
The failed CLARITY Act vote placed additional pressure on crypto markets. Shortly after the Senate did not pass the Act, around $300 million in long positions across major cryptocurrencies were liquidated. The setback heightened regulatory uncertainty as observers looked for clearer rules to govern digital assets in the U.S.
As the market absorbed the consequences of the failed bill and outflows from crypto ETFs, speculative excesses were largely flushed out before Federal Reserve Chair Kevin Warsh’s remarks.
Mini dictionary: CLARITY Act, a proposed piece of legislation in the U.S. aimed at providing clearer regulatory guidance on the classification and supervision of digital assets and cryptocurrencies.
Looking ahead: Fed policy signals and crypto impact
The Federal Reserve’s new projections indicated that 16 of 18 policymakers expect to approve at least one more 25-basis-point rate increase before the end of 2026. Higher interest rates generally create tighter financial conditions and can reduce appetite for risk assets like digital currencies, as investors may prefer rising yields offered by bonds and cash.
| Asset | Current Price | Last 24h Liquidations | ETF Net Outflows |
|---|---|---|---|
| BTC | $76,000 | $455 million (all crypto) | $450 million |
| ETH | $2,400 | – | Significant |
| XRP | $1.28 | – | – |
Rising Treasury yields, with 5% rates on U.S. government bonds, have added to these pressures and are affecting both corporate stocks and cryptocurrencies. Crypto’s ability to hold above recent lows after both the CLARITY Act setback and the latest Fed hike suggests the market is showing some resilience, with forced sales tapering for now.
Traders warn that Bitcoin and other major cryptocurrencies still need to reclaim higher resistance levels before any sustained recovery can be confirmed.
Similar dynamics are at play for Ethereum and XRP, which entered the Fed meeting already weakened by broad market selling. Both will likely continue to respond to changes in Bitcoin’s price, Treasury yields, and shifting expectations about the central bank’s future moves.
For now, the cryptocurrency sector has weathered Wednesday’s rate hike without experiencing another immediate market crash.
