The Fed raises rates by 25 basis points and Bitcoin resists

The Fed is returning to monetary tightening after more than three years without an increase. Indeed, the American central bank raised its rates by 25 basis points, bringing their range to 3.75% – 4.00%, a first since July 2023. This decision is motivated by still high inflation, however it did not automatically shake bitcoin. Despite increased volatility after the announcement, BTC stabilized around $76,200. Between monetary tightening and the resistance of the crypto market, the Fed’s decision now opens the question of the trajectory of rates.

The Fed resumes rate hikes

The Federal Open Market Committee approved a 25 basis point increase, setting the new Fed Funds range between 3.75% and 4.00%. This was a unanimous vote of the governors. Furthermore, this movement was already fully anticipated by the market. The Federal Reserve has not increased its rates since July 2023. Thus, the decision puts an end to more than three years without an increase and marks the return of tightening in United States monetary policy.

The Fed is basing its choice on an economy that still retains strength. The FOMC noted :

Economic activity is growing at a solid pace.

However, monetary officials recognize still high uncertainty, linked mainly to geopolitical developments, but note that domestic spending has held up. Such a combination provides the Fed with room to act on prices without presenting its intervention as the response to a sudden deterioration in activity.

The FOMC’s decision can thus be reduced to three central data:

• 25 basis points: the extent of the increase decided by the Fed;
• 3.75% to 4.00%: the new Fed Funds target range;
• July 2023: the date of the previous rate increase by the American central bank.

Inflation remains at the heart of monetary calculation

The diagnosis formulated on prices immediately justifies this change of direction. Thus, the FOMC makes the following observation: “inflation remains high”. The central bank links its rate increase to its price stability objective. According to his statement, the decision taken this Wednesday must be favorable to “a faster return to the Committee’s 2% objective”. The message ends with an explicit commitment: “the Committee will ensure price stability”.

Therefore, the individual forecasts of Fed officials specify an additional increase in 2026. This projection underlines that monetary officials do not necessarily consider the 25 basis point movement as an isolated intervention. The question therefore concerns the duration of this new phase and the indications that the Fed will offer on its evolution.

Bitcoin resists Fed change of course

First, this announcement triggers volatility in the crypto market without causing any major directional movement. Bitcoin is currently trading around $76,200, indicating a slight rebound. Also, traditional markets are reacting with measure. US stocks remain modestly in the green, while bond yields have fallen slightly. This absence of automatic break occurs while the increase of 25 basis points had been widely anticipated.

However, the reaction of bitcoin a few minutes following the announcement does not yet represent a measure of its longer-term effects. The Federal Reserve has just resumed rate increases while notifying that a further increase remains envisaged in 2026. Having anticipated the current decision, the market must now be able to assess the trajectory that accompanies it.

Bitcoin’s initial resistance only shows that the announcement did not cause an immediate decline. Between inflation still above the 2% target, a strong economy and the prospect of further tightening, investors now have a new monetary framework to integrate.