Crypto rallies through the Fed's first rate increase since 2023
Reported by CoinDesk · AI-assisted summary by ChikoCorp AI News Desk
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Summary
The Federal Reserve raised interest rates by 25 basis points, the first increase since July 2023, projecting a median policy rate of 4.1% for the end of 2026 and 2027. This led to a broad-based crypto rally, with Bitcoin trading near $76,621 and 94 of 100 CoinDesk constituents increasing in value. Zcash surged 23% to a record high near $1,369 after Paradigm co-founder Matt Huang revealed the firm owns Zcash and supports its development.
Why it matters
The Fed’s rate hike and its projections reassured traders by implying only one more small increase, prompting a rally in risk assets including crypto. The market's reaction showed a shift back to crypto aligning with broader equities rather than leading independently. The rally particularly favored speculative small-cap tokens, influencing trading sentiment and futures open interest.
Key context
The Fed’s “dot plot” forecast suggests no sustained tightening cycle, a factor that investors welcomed amid persistent inflation concerns. Crypto derivatives open interest increased, especially for Zcash, which experienced notable liquidations and negative funding rates despite rising prices. Bitcoin ETFs saw significant outflows over several days despite price gains, indicating cautious investor behavior.
Key numbers and entities
The Federal Reserve raised rates 25 basis points to 3.75%-4%. Bitcoin rose 0.88% to $76,621, Zcash jumped 23% to about $1,369, and Ether increased 1.1% to $2,444.36. Paradigm’s co-founder Matt Huang disclosed Zcash ownership. Crypto futures open interest reached $64.4 billion, with Zcash open interest up 37.84% to $2.2 billion. Bitcoin ETFs lost over $1 billion in seven sessions, dropping net assets to $95.19 billion.
What remains unclear
The source does not specify the long-term implications of the Fed’s policy on crypto beyond immediate market reactions. Details on the underlying reasons for persistent Bitcoin ETF outflows amid price gains are not explained. The significance of Zcash’s governance changes and how they may impact its future adoption or market behavior also remains unaddressed.