On September 17, the U.S. Federal Reserve voted unanimously, 12-0, to raise interest rates by 25 basis points, lifting the federal funds rate to 3.75%-4.00%. This was the first rate hike since July 2023. But what truly led markets to reprice—not the hike itself—was the burst of signals released by multiple Fed officials immediately after the decision was announced: this is not a one-off move, but the starting point of a tightening path.

The key message discussed intensively by officials

At the press conference, Vosh spoke in extremely direct terms: “Inflation is too high, and it has been going on for far too long. The inflation data for this summer hasn’t made me feel that any underlying trend has improved in any substantive way.” He added that the current financial conditions are “difficult to characterize as restrictive,” and the committee therefore decided to “cancel some of the adjustment measures.”

This means the Fed believes it hasn’t truly begun tightening yet—it is simply unwinding some of the earlier excessive easing. The dot plot confirms this: of the 18 officials who submitted forecasts, 16 expect at least one more rate hike before year-end, 4 expect two more hikes, and none expect a rate cut this year. The midpoint rate expectation for end-2026 was revised upward from 3.8% to 4.1%.

CICC’s interpretation is that the signal delivered by Waish is very clear: as long as inflation cannot slow effectively—even if the source is supply-side shocks like oil prices—the Fed must respond actively. China Everbright Securities’ Xiong Yuan, meanwhile, judges this as a round of “mild, intermittent rate hikes,” with a high likelihood of at most one more hike afterward.

Why isn’t BTC falling, but instead rising?

Before the decision was released, BTC was under pressure around $76,000. After the rate hike was implemented, it briefly dipped before strongly surging to $87,395 on September 21, setting a new high since January 2026, with a weekly gain of roughly 11%.

At face value, this seems to run counter to the intuition that “rate-hike risk is bad for risk assets.” But breaking it down, there are three lines of logic supporting it.

First, the pricing logic of “all bad news is priced in.” Wintermute clearly pointed out that two pieces of negative news—the Fed’s rate hikes and the (Clarity) bill running into obstacles in the Senate—had already been priced in by the market. While the decision leans hawkish, for risk assets it can paradoxically be seen as an “ideal relative outcome”: with the 10-year Treasury yield staying around 5%, if the Fed were to release dovish signals, it would actually weaken its credibility.

Second, the Treasury’s implicit hedge. The U.S. Treasury expanded long-dated Treasury buybacks, lowering the term premium and real yields. Since the end of August, this policy injected roughly $740 billion of value into the crypto asset class—essentially, while the Fed tightens with one hand, the other hand is releasing liquidity.

Third, the resonance between ETF flows and short covering. On September 21, US spot Bitcoin ETFs recorded $998.9 million in net inflows, the largest single-day amount since October 2025. On the same day, more than $920 million worth of short positions were forced to close. Short covering and ETF inflows formed a positive feedback loop.

But the sustainability of the rebound depends on one core contradiction

Grayscale characterizes this rate hike as a “mid-cycle adjustment, not a shift in monetary policy.” Its research主管 Zach Pandl noted that in March 1997, when Greenspan led the Fed, it implemented a similar one-off rate hike, yet the Nasdaq bull market continued.

This analogy is enlightening, but there is one key difference: the inflation in 1997 wasn’t as stubborn as it is today. The Fed expects core PCE to remain at 2.5% through 2027, while overall PCE will not return to the 2% target until 2029. This means the high-rate environment will persist longer than the market expects.

The warning from Bloomberg Intelligence chief macro strategist Mike McGlone is worth taking seriously: in a backdrop where US Treasuries can offer around 5% annualized fixed income returns in USD terms, the appeal of allocating to Bitcoin and gold is weakening. The opportunity cost of non-yielding assets remains the structural pressure hanging over BTC.

Trading takeaways

BTC is currently above its 50-week moving average. Positioning in the options market is gradually shifting toward a bullish structure. The market’s focus has shifted to whether it can challenge the $126,000 historical high again this year. But Wintermute also admits it’s still too early to judge whether Bitcoin will refresh its all-time high right now.

In the coming weeks, the key variables are: whether Fed officials make more than 10 public speeches, and whether inflation data (PCE, CPI) can send a “sustained decline” signal. This will determine whether the “one more hike” on the dot plot remains a forecast—or actually becomes reality.

If inflation data remains stubborn, Worsch’s hawkish stance will not loosen, and BTC’s rebound will face renewed suppression through the interest-rate channel. If inflation shows substantial improvement and tightening expectations cool down, then BTC may have the chance to turn the rebound—after “all bad news is priced in”—into a sustained trend.

Until then, when the direction is unclear, waiting for the data to deliver clearer signals is safer than betting early$