Fed hikes to 4% and bitcoin absorbs its hawkish dot plot

The Federal Reserve raised its target range for the federal funds rate by a quarter point to 3.75%-4% on Wednesday, in a 12-0 vote recorded in the FOMC statement released at 2:00 p.m. EDT. It is the first increase since 2023, and the first policy move of Chair Kevin Warsh’s tenure in either direction — he has delivered no cuts since succeeding Jerome Powell.

The statement went further than the rate. The committee kept its closing line unchanged — “The Committee will deliver price stability” — and described the increase as supporting “a timelier return to the Committee’s 2 percent goal.” According to BeInCrypto, language from July that attributed part of elevated inflation to supply shocks in energy and other sectors was dropped, and the reference to the Middle East conflict was broadened to “geopolitical developments.”

The projections moved more than the rate

The Summary of Economic Projections released alongside the decision raised the median projection for the federal funds rate at the end of 2026 to 4.1%, from 3.8% in June. With the new range topping out at 4%, a 4.1% median implies one more quarter-point increase before the year is out. BeInCrypto counted sixteen of the eighteen participants projecting at least one additional increase in 2026.

The same table raised the median core PCE inflation projection for 2026 to 3.4% from 3.3%, held headline PCE at 3.7%, and cut the unemployment rate projection to 4.1% from 4.3%. The longer-run funds rate median was unchanged at 3.2%.

The implementation note set the interest rate paid on reserve balances at 3.90% and the primary credit rate at 4.0%, both effective September 17. Overnight reverse repurchase operations will be offered at 3.75%, with a per-counterparty limit of $160bn per day.

How crypto traded it

Bitcoin jumped from roughly $75,350 to above $76,100 within minutes of the statement, then gave the move back during Warsh’s press conference, trading near $76,152 and down 0.7% over 24 hours, according to BeInCrypto. Gold moved the other way: spot prices spiked toward $4,368 and then sold off to settle near $4,333.

The muted reaction followed a softer afternoon. On KuCoin spot data, bitcoin’s session low for the day the decision landed was $75,064.3, and it has since recovered: the pair traded at $76,571 at 09:00 UTC on Thursday, up 1.1% over 24 hours and within $190 of its session high of $76,761. Ether changed hands at $2,445.89, up 1.8%.

The hike landed in a week that had already gone badly for crypto. The Senate blocked the Digital Asset Market Clarity Act on Tuesday 49-50, and BeInCrypto reported that the failure wiped out more than $300m in leveraged positions. White House adviser Christopher Phelan had argued against a hike this week, citing falling inflation data.

ETF flows printed a second red day

Wednesday’s data confirmed a second consecutive session of net redemptions across the US spot bitcoin funds: $295.9m left the complex on September 16, according to Farside Investors figures published Thursday. BlackRock’s IBIT accounted for $144.1m of it, ARK 21Shares’ ARKB $84.4m, Fidelity’s FBTC $52.7m and Grayscale’s GBTC $18.2m. Morgan Stanley’s MSBT was the only fund to record a net inflow, at $3.5m. Combined with Tuesday’s $450.4m, the two sessions total $746.3m of net redemptions.

The next scheduled inputs are the September 30 PCE print and the September 25 Deribit options expiry, where roughly $14.63bn of bitcoin notional settles against an estimated max-pain band of $72,000-$75,000, per Crypto Briefing.