The US Fed raised interest rates for the first time in 3 years... Why did Bitcoin jump to $76,000?

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Although the Federal Reserve raised its benchmark interest rate for the first time since 2023, Bitcoin (BTC) surged to $76,000 immediately after the announcement, contrary to expectations. As the market had already priced in a 0.25 percentage point increase with a 93% probability, the possibility of future additional rate hikes, rather than the rate decision itself, emerged as a new variable for the cryptocurrency market.

According to crypto media outlet Decrypt on September 16 (local time), the Fed raised the benchmark interest rate by 0.25 percentage points from the existing 3.50-3.75% to 3.75-4.00% at the Federal Open Market Committee (FOMC) meeting. This was the first rate hike since 2023, with all 12 FOMC members voting in favor. The likelihood of a rate hike, as reflected in the US Chicago Mercantile Exchange (CME) FedWatch, was 93% just before the announcement, a significant increase from less than 50% a month prior.

Bitcoin moved between $75,000 and $75,800 before and after the announcement, then surged to $76,000 immediately afterward. It then rose to around $75,900 before returning to approximately $75,100 within minutes, showing high volatility. The overall cryptocurrency market fell by about 2.18% on this day. BTC had previously been significantly pushed down from its September high of approximately $82,000 due to the failure of the Senate's cloture vote on the US crypto market structure bill, the Clarity Act.

The background of this interest rate hike was renewed inflationary pressure. The US August Producer Price Index (PPI) rose 5.4% year-over-year, an increase from 4.8% in July, and commodity prices rose 1.1% month-over-month. The Consumer Price Index (CPI) rose 3.4% year-over-year, and the month-over-month increase expanded from 0.1% in July to 0.4% in August. Core inflation, excluding food and energy, also rose from 0.2% to 0.3% month-over-month. Oil prices exceeding $100 per barrel and stronger-than-expected August employment figures also supported the Fed's tightening decision.

Bitcoin's short-term key is the $73,500-$75,600 support zone. Market analysts suggested a potential drop to $71,000 if the daily closing price forms below this zone, with some technical models indicating it could fall to $66,900. In this scenario, the golden cross that triggered the summer bull run could be invalidated. However, BTC tested this zone directly after the rate announcement and did not break below its lower boundary. The Crypto Fear & Greed Index fell from 69 the previous day to 51, moving into the neutral zone.

The Fed assessed that economic activity is expanding at a solid pace and employment growth is keeping pace with labor force growth, but inflation remains high. The next FOMC is scheduled for October 27-28, with subsequent meetings and a new dot plot to be released on December 8-9. Wall Street is also keeping open the possibility of further tightening by the end of the year, so whether this 0.25 percentage point increase is the last hike of the year or the beginning of additional rate hikes remains a key variable for the future Bitcoin and altcoin markets.

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