On September 16, 2026, the US Federal Reserve lifted its target range by a quarter point to 3.75-4.00% in a 12-0 vote (source: Federal Reserve, September 16, 2026 statement). It was the Fed's first rate increase since July 2023 (source: Federal Reserve, July 26, 2023). In the week that followed, bitcoin rose about 11.6%, from $75,656.09 the day before the decision to $84,452.97 on September 23 (source: FRED, Federal Reserve Bank of St. Louis).
That is the opposite of the usual rule, which says higher rates are bad for bitcoin. The rule failed the other way too: in late 2025, each of the Fed's three rate cuts was followed by a week of falling bitcoin prices.
The rule is not wrong, but it describes a pressure, not a trigger. Once you see how rates reach bitcoin's price, and what markets had already expected before each decision, the September move makes sense, and so does the next Fed meeting on October 27-28.
How do Fed rate hikes affect bitcoin?
Fed rate hikes tend to weigh on bitcoin because they make cash and bonds pay more, strengthen the US dollar and cool investors' appetite for risk. A Bank for International Settlements working paper covering 2019 to mid-2024 found that "As monetary policy tightens, crypto prices fall" (source: BIS Working Paper 1219).
The effect shows up most when a decision surprises the market. A decision the market already expects is mostly in the price before it happens, so what bitcoin does in the following days depends on what else is moving markets. Since 2022, the outcomes have varied widely:
Fed action | What bitcoin did | Why |
|---|---|---|
Three cuts, late 2025 | Fell 6-7% in the week after each | A cut alone did not lift the price |
Expected hike, September 2026 | Rose 11.6% in the week after | Already priced in; fund buying followed |
Long hiking cycle, 2022-2023 | Fell 28.6% over the cycle (source: FRED, Federal Reserve Bank of St. Louis) | Higher rates plus crypto's own collapses, including Terra and FTX |
How interest rates reach bitcoin's price
Interest rates reach bitcoin through three main channels: the reward for holding cash instead, the US dollar and investors' appetite for risk. Each one works on a different group of buyers, which is why the effect can be strong in one year and hard to see in another.
The first channel is the reward for waiting. Bitcoin pays no interest, so every dollar held in bitcoin gives up what that dollar could earn in cash or government bonds. The same BIS paper explains why stablecoin holdings shrink when rates rise. As rates rise, holding assets that pay no interest costs more, so investors move at the margin toward traditional investments, and the authors call contractionary policy surprises "negative for crypto" (source: BIS Working Paper 1219).
Here is what that looks like for one investor. Say you hold $10,000 you could keep in bitcoin or in a cash fund. At a 4% cash rate, the fund pays you about $400 a year for doing nothing. When the Fed raises rates, that number grows, and bitcoin has to promise a bigger price gain to be worth the risk. For some investors, the promise is no longer big enough, and they sell.
The second channel is the dollar. A Fed staff note finds that a surprise rise in US interest rates relative to other countries' rates usually strengthens the dollar (source: Federal Reserve FEDS Note). Bitcoin is priced in dollars, so a stronger dollar can push its price down even when nothing in crypto has changed.
The third channel is appetite for risk. The Fed explains that rate changes move stock prices by making shares more or less attractive than other investments (source: Federal Reserve, monetary policy explainer). Bitcoin began trading more like stocks in 2020: an International Monetary Fund (IMF) staff blog found the correlation between bitcoin and the S&P 500 rose from 0.01 in 2017-19 to 0.36 in 2020-21 (source: IMF blog). Traders who follow that link use correlation trading to compare the two markets.
The Fed's rate path from 2025 to the September 2026 hike
The Fed cut rates three times at the end of 2025, held them from January to July 2026, then raised them by a quarter point on September 16, 2026, to 3.75-4.00%. Each of the 2025 cuts was also a quarter point, and none of the three was unanimous:
Decision date | What the Fed did | Target range after | Vote |
|---|---|---|---|
September 17, 2025 | Cut | 4.00-4.25% | 11-1 |
October 29, 2025 | Cut | 3.75-4.00% | 10-2 |
December 10, 2025 | Cut | 3.50-3.75% | 9-3 |
January to July 2026 | Held at every meeting | 3.50-3.75% | July: 9-3, with three members wanting a hike |
September 16, 2026 | Raised | 3.75-4.00% | 12-0 |
Every rate decision sets a target range for the federal funds rate, the interest rate banks pay to borrow from each other overnight. Short-term borrowing costs across the economy tend to follow it (source: Federal Reserve, monetary policy explainer). The September hike put rates back where they had been after the October 2025 cut (source: Federal Reserve, October 29, 2025). It was also the first rate change under Kevin Warsh. He took the oath as Fed chairman on May 22, 2026, after being nominated on March 4 and confirmed by the Senate in May (source: Federal Reserve, May 22, 2026).
The Fed's own projections point to one more hike. The projections include the dot plot, a chart where each official's view of the right rate at the end of each year appears as a dot. In the September 16 projections, the median official expected the policy rate to end 2026 at 4.1%, the midpoint of a range a quarter point above the new one. Twelve of the 18 officials projected one more hike, four projected two, and two projected none (source: Federal Reserve, Summary of Economic Projections). These are projections of what each official thinks is appropriate, not promises, and Warsh said he had not offered a projection of his own (source: Federal Reserve, September 16 press conference).
What bitcoin did after each Fed rate change
In the week after each of the Fed's four rate changes from September 2025 to September 2026, bitcoin moved against the textbook. It fell over the following week after all three 2025 cuts and rose after the 2026 hike (source: FRED, Federal Reserve Bank of St. Louis).
Measured from the evening before each decision, bitcoin moved less than 2% by the evening of the announcement itself (source: FRED, Federal Reserve Bank of St. Louis):
Fed decision | Bitcoin, day before to decision day | Bitcoin, day before to 7 days after |
|---|---|---|
September 17, 2025 cut | Up 0.5% | Down 6.4% |
October 29, 2025 cut | Down 1.6% | Down 6.0% |
December 10, 2025 cut | Down 1.1% | Down 6.7% |
September 16, 2026 hike | Up 0.7% | Up 11.6% |
A week is long enough for other news to swamp the Fed. The January 28, 2026 hold, for example, was followed by an 18.4% fall from the day before the decision to February 4 (source: FRED, Federal Reserve Bank of St. Louis). That fall came in the same weeks that news broke that Warsh would become the next Fed chair (source: Yahoo Finance). US spot bitcoin funds also saw about $3.9 billion of net outflows between January 16 and February 5 (source: Farside Investors). Those outflows were one of the forces behind bitcoin's drop in early 2026.
Why an expected decision barely moves bitcoin
Markets trade on expectations, so by the time the Fed announces a widely expected move, most of the effect is already in the price. Before the September 16 hike, CoinDesk reported that markets were pricing a 92.5% chance of a rate rise. After the announcement, bitcoin sat about where it had been before the news, near $75,700 (source: CoinDesk). The rise came later, including on September 21, when US spot bitcoin funds took in $999.0 million, their largest daily inflow since October 2025 (source: Farside Investors).
What moves prices on Fed day is the surprise: a bigger or smaller move than expected, a change in the projections, or a hint about the next meeting. That is why traders read the Fed's statement and its projections as closely as the decision itself.
If you trade with leverage, Fed days can bring sudden swings in both directions. BloFin offers leverage on bitcoin through perpetual contracts such as the BTCUSDT Perpetual. Its page shows the live funding rate, the regular payment between traders betting on a rise and traders betting on a fall that keeps the contract's price close to bitcoin's price.
If you would rather your margin sat in USDC, BloFin lists the same market as the BTCUSDC Perpetual, and the live funding rate of the USDT version is on the BTCUSDT Perpetual page.
What past hiking cycles show
Longer hiking cycles do line up with bitcoin bear markets, and crypto's own crises struck during the same period. Across the Fed's 2022-2023 hiking cycle, from the first hike to the last, bitcoin fell 28.6% (source: FRED, Federal Reserve Bank of St. Louis).
That cycle began on March 16, 2022 (source: Federal Reserve, March 16, 2022). Its final hike came on July 26, 2023, when the Fed raised its target range to 5.25-5.50% (source: Federal Reserve, July 26, 2023). At its low on November 21, 2022, bitcoin was down 61.7% from the first hike day (source: FRED, Federal Reserve Bank of St. Louis).
Much of that fall came during crypto's own collapses, including these two. In May 2022, the TerraUSD stablecoin collapsed (source: SEC). Bitcoin fell about 15% between May 8 and May 12 (source: FRED, Federal Reserve Bank of St. Louis). In November 2022, it fell about 23% between November 7 and November 9 (source: FRED, Federal Reserve Bank of St. Louis). The FTX exchange paused customer withdrawals on November 8, in the middle of that fall (source: SEC complaint against Sam Bankman-Fried). Before that fall, bitcoin had risen about 2% in the five days after the Fed's November 2 hike (source: FRED, Federal Reserve Bank of St. Louis).
The 2018 rate hikes look similar on the surface. Bitcoin fell 58.6% between the Fed's first and fourth hikes that year, but it had already peaked on December 16, 2017, at $19,650.01, three months before the first of that year's hikes (source: FRED, Federal Reserve Bank of St. Louis). The Fed's fourth 2018 hike came on December 19 (source: Federal Reserve, December 19, 2018).
Research does not settle the question either. A New York Fed staff study of 2017-2022 found that "Bitcoin is orthogonal to monetary and macroeconomic news". In plain terms, it did not react in a consistent way, except to inflation (CPI) data (source: New York Fed Staff Report 1052). A Bundesbank study covering mid-2013 to mid-2021 even found that a Fed tightening "increases Bitcoin prices" (source: Bundesbank Discussion Paper 41/2021). Both papers state their authors' own views, and set beside the BIS paper they show a link whose size and even direction change from one study to the next. The studies also measure different things. The New York Fed study looks at the 30 minutes around each announcement. The BIS paper follows crypto markets for about three months after a policy surprise and finds they shrink over that period, led by stablecoins (source: BIS Working Paper 1219). Bitcoin also moves in its own crypto market cycles, which have their own timing.
Beyond interest rates: The balance sheet, Fed independence and crypto rules
The Fed moves markets in three ways besides its interest rate. It decides how many bonds it holds, its independence from the White House shapes how much markets trust its decisions, and it supervises the banks that crypto companies rely on:
Lever | Latest change | Why it matters for bitcoin |
|---|---|---|
Balance sheet | Shrinking stopped December 1, 2025; bill purchases began December 12, 2025 | Adds or drains money in markets, separately from the rate |
Independence | Supreme Court refused, 5-4, to let the firing of Governor Cook take effect (June 29, 2026) | Affects how far markets trust Fed decisions |
Crypto supervision | Proposed a limited "payment account" for eligible firms (May 20, 2026) | Shapes how easily crypto firms get banking services |
The Fed's balance sheet
The Fed's balance sheet is the stock of bonds it owns, and changing it adds or removes money in the financial system. The Fed stopped shrinking its bond holdings on December 1, 2025 (source: Federal Reserve, October 29, 2025). From December 12, it began buying Treasury bills to keep bank reserves ample, starting with about $40 billion in the first month (source: New York Fed).
Warsh has put the balance sheet under review. In June he set up a task force on balance sheet policy (source: Federal Reserve, June 17 press conference). In July he asked "how much accommodation are we getting from the balance sheet?" (source: Federal Reserve, July 29 press conference). Any decision to shrink it again would drain money from markets, which is a separate pressure from the interest rate.
Fed independence
Markets price Fed decisions as economic judgments, so any sign that politics is driving them adds uncertainty. In August 2025, President Trump moved to fire Fed Governor Lisa Cook. On June 29, 2026, the Supreme Court voted 5-4 to refuse the government's request to let the firing take effect while the case continues (source: US Supreme Court). Cook remains on the Board (source: Federal Reserve, Board members). The case is not over, so the question of how far a president can reshape the Fed is still open.
Crypto supervision
The Fed also decides how banks may deal with crypto companies, and it has loosened its approach. It withdrew earlier crypto guidance for banks on April 24, 2025 (source: Federal Reserve, April 24, 2025). On June 23, 2025, it announced that reputational risk would no longer be part of its bank exams (source: Federal Reserve, June 23, 2025). On August 15, 2025, it announced it would end its special program for supervising banks' crypto and fintech activities (source: Federal Reserve, August 15, 2025). In May 2026 it proposed a limited "payment account" that eligible firms could use to clear and settle payments (source: Federal Reserve, May 20, 2026).
How to follow a Fed decision as a crypto trader
Treat a Fed meeting as a scheduled event with a known date and an unknown surprise. Before the meeting, check what the market expects. Then watch for the parts of the announcement that differ from it, especially the projections and the dollar's reaction.
Five checks cover most of it:
Mark the date. The next meetings are October 27-28 and December 8-9, and the December meeting comes with new projections (source: Federal Reserve calendar).
Check what is priced in. The CME FedWatch tool turns interest-rate futures prices into the odds of each outcome, and news sites report those odds before the decision.
Watch the inflation data between meetings, since bitcoin and inflation have a mixed record. The New York Fed study found inflation (CPI) releases were the one kind of economic news bitcoin did react to.
Read the statement and the projections, not just the rate. Traders call a message that leans toward higher rates hawkish and one that leans toward cuts dovish. A change in the number of officials expecting more hikes can matter more than the decision itself.
Watch the dollar. A sharp rise in the dollar after a decision is one of the clearest channels to bitcoin.
Say you open a 20x position on the BTCUSDT Perpetual in isolated margin mode, where the margin set aside for that one position is what you can lose. A 5% move against you is enough to wipe that margin out, so review leverage and liquidation before the announcement.
Keeping positions smaller around scheduled news is the simplest way to manage event risk in crypto.
If you would rather follow experienced traders through Fed weeks, BloFin's Futures Copy Trading lets you copy a lead trader's positions and set your own limits on size and risk. Read about copy trading risk management first, because a lead trader's leverage carries into your copied positions unless you set a leverage cap of your own.
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Frequently asked questions
What does FOMC mean in crypto?
FOMC stands for the Federal Open Market Committee, the group inside the US Federal Reserve that sets interest rates. It meets eight times a year (source: Federal Reserve calendar). Its decisions are usually released at 2 p.m. US Eastern time on the second day of the meeting (source: Federal Reserve, September 16, 2026 statement). Crypto traders use "FOMC" as shorthand for those decision days, because they often bring sharp price swings.
Do rate cuts make bitcoin go up?
Rate cuts make cash pay less, which lowers the cost of holding bitcoin, but they have not reliably lifted its price. The Fed cut three times between September 17 and December 10, 2025. Yet bitcoin ended the year at $87,696.00, about 24.7% below its $116,484.40 price on September 16, the day before the first cut (source: FRED, Federal Reserve Bank of St. Louis).
Will the Fed raise rates again in 2026?
The median official in the Fed's September 2026 projections expected the rate to be 4.1% at the end of both 2026 and 2027. That means one more quarter-point hike in 2026 and then a pause (source: Federal Reserve, Summary of Economic Projections). The same median falls to 3.9% for the end of 2028 and 3.6% for the end of 2029. Fed Chair Kevin Warsh said at his September 16 press conference that he is "not in the forward guidance business" (source: Federal Reserve, September 16 press conference). BloFin Research sets out the case for one or two more hikes in 2026 in how many more Fed hikes to expect.
When is the next Fed meeting?
The Fed's next two meetings in 2026 are on October 27-28 and December 8-9, and each decision is usually announced at 2 p.m. US Eastern time on the second day (source: Federal Reserve calendar). The December meeting also brings a new Summary of Economic Projections, including the dot plot, so it tends to carry more new information than October's. Before either one, check what interest-rate futures are pricing, because bitcoin reacts to the gap between that and the decision more than to the decision itself.
Why does a strong dollar matter for bitcoin?
If you buy bitcoin with euros, yen or another currency, the dollar's moves change the price you pay even when bitcoin's dollar price stands still. When the dollar rises 5% against the euro and bitcoin's dollar price is unchanged, bitcoin costs 5% more in euros. The dollar can also move bitcoin's dollar price: in August 2026, a CoinDesk analysis suggested bitcoin's weakness was more likely tied to broad US dollar strength than to the yen (source: CoinDesk, August 3).
Researched and written by the BloFin Academy editorial team with AI-assisted drafting. All facts independently verified. Primary sources include the Federal Reserve, FRED (Federal Reserve Bank of St. Louis), the New York Fed, the Bank for International Settlements, the IMF, the Deutsche Bundesbank and the US Supreme Court, alongside Farside Investors and reporting from CoinDesk and Yahoo Finance, with prices as of the September 23, 2026 close.
Nothing in this article constitutes financial advice, and nothing in it is a recommendation to buy, sell or hold bitcoin or any other digital asset. The Fed's projections are the views of its officials, not commitments, and nothing here predicts the Fed's next decision or bitcoin's reaction to it. Leveraged products including perpetual futures carry additional risk around scheduled events, because sudden moves can close positions automatically and losses can exceed what you expect. BloFin services are not available in restricted locations, including the United States. Past performance does not indicate future results. Do your own research and consider your risk tolerance before you trade on BloFin.