Fed lifts rates 25 bps to 3.75%–4%; bitcoin briefly nears $76,000

The Federal Reserve raised its target range for the federal funds rate by 25 basis points to 3.75%–4%, marking its first rate increase since July 2023, according to CoinDesk. Markets turned choppy after the decision, and bitcoin briefly climbed toward $76,000. The Fed's dot plot continued to signal additional tightening. In the latest economic projections, 16 of 18 officials penciled in at least one more hike before the end of 2026. The median projection shows the policy rate reaching 4%–4.25% by end-2026 and holding there through end-2027, indicating policymakers do not view the latest move as a one-off adjustment. The decision was unanimous, and the target range moved up from 3.5%–3.75% to 3.75%–4%. Attention now turns to December inflation readings and subsequent data. Rising oil prices and firmer inflation have lifted expectations for tighter policy. Middle East tensions have disrupted supply routes, pushing Brent crude briefly above $100 per barrel. At the same time, U.S. inflation data for August came in stronger than expected: headline CPI rose 3.4% year over year, while core CPI increased 0.3% month over month and 2.4% year over year. Producer price data ahead of the meeting also beat expectations, reinforcing the tightening narrative that the bond market had already priced in. Before the announcement, the 10-year Treasury yield briefly touched 5%, its highest since 2007. Afterward, the 2-year yield continued to climb and the U.S. Dollar Index rose to 100.18. Bitcoin posted a short-term bounce but remained under broader pressure. Around the decision, it traded between $75,000 and $75,800 before briefly approaching $76,000, with a relatively muted reaction given expectations were largely priced in. CoinDesk noted that a day before the decision, total crypto market capitalization fell more than 2% to about $2.6 trillion. In the past 24 hours, more than $540 million in long positions were liquidated, and U.S. spot bitcoin ETFs saw net outflows exceeding $450 million on Sept. 15. Higher Treasury yields tend to weigh on risk assets such as bitcoin by offering investors more attractive returns in lower-volatility government bonds. A stronger dollar also raises the cost for non-U.S. investors to buy dollar-denominated assets. Sentiment was further hit after a procedural vote on the Digital Asset Market Structure Bill failed in the U.S. Senate. The bill aimed to split oversight of digital assets between the Securities and Exchange Commission and the Commodity Futures Trading Commission.