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Digital currencies experienced a price recovery after the Federal Reserve enacted its initial interest rate hike since July 2023, a surprising response given that Federal Open Market Committee actions normally make yield-generating assets more appealing.
BTC$81,219.18
gained nearly 1% throughout the previous 24-hour window, while zcash (ZEC) surged past 23% to reach a new all-time high.
Participants who lived through prior monetary tightening phases by the Fed, particularly the events of 2022, will likely maintain a defensive stance, however.
Bitcoin currently trades roughly 40% below its October peak of $126,000. When the central bank initiated policy tightening in March 2022, the asset sat at approximately a 40% discount from its November 2021 top.
Across the subsequent 12 days, the premier digital asset advanced 18% before descending by 50% over a multi-month span, an interval that also witnessed the implosion of digital asset exchange FTX.
The recovery phase of that sequence has already commenced, with bitcoin withstanding downward pressure following the shelving of the U.S. Clarity Act, though exchange-traded fund metrics continue showing persistent softness, evidenced by $746 million flowing out of spot bitcoin funds across Tuesday and Wednesday alone.
Historical precedent also cautions against a singular rate adjustment. Since 1994, the Fed has instituted a single rate hike and halted further action on just one occasion. Interest rate futures currently price in an additional 75 basis points of tightening over the upcoming half-year period. Goldman Sachs subsequently accelerated its projection for the next rate increase to October.
The central difficulty involves the Fed tightening monetary policy directly into a supply-driven inflation shock outside its sphere of influence. Core inflation has cooled to 2.4%, marking a five-year low, yet both Brent and WTI crude oil remain over $100 per barrel, American diesel prices reached historical highs during the week, and the 10-year Treasury yield hovers at 5%.
Federal Reserve Chair Kevin Warsh explicitly acknowledged this dynamic, noting that the central institution lacks control over individual commodities but can prevent relative price adjustments from spreading more broadly.
Initial indicators of market enthusiasm are present, evidenced by zcash reaching record territory and bitcoin defending its baseline against both a stalled legislative effort and the initial borrowing cost increase in three years. The historical parallel to 2022 faces its true test toward the conclusion of the month, when the historical rally from four years prior lost momentum. Stay alert!
Read more: For analysis of today’s activity in altcoins and derivatives, see Crypto Markets Today . For a comprehensive list of events this week, see CoinDesk’s “Crypto Week Ahead.”
What’s trending
- Zcash jumps 23% as bitcoin and major tokens rise despite Fed’s first hike since 2023 (CoinDesk): Privacy token Zcash surged 23% over the past 24 hours as bitcoin and other major cryptocurrencies rose overnight into Asian morning hours Thursday, alongside a recovery in stock futures.
- Treasury yields move lower after Fed kicks off hiking cycle (CNBC): Treasury yields edged slightly lower on Thursday. The 10-year Treasury yield was lower at 4.984%. The 30-year Treasury yield was down to 5.334%, while the yield on the 2-year note slipped to 4.705%.
- Dollar eases from seven-week peak as oil prices extend decline (Reuters): The dollar eased after touching a seven-week high following the Fed’s decision to raise interest rates and curb inflation.
Today’s signal
The U.S. Dollar Index (DXY) surpassed 100 for the initial instance since late July following the Federal Reserve’s announcement of a 25 basis point rate increase on Wednesday.
This index gauges the greenback’s valuation against a basket of six principal international currencies. A stronger American dollar frequently creates headwinds for speculative assets like bitcoin by tightening global liquidity conditions.
The DXY metric has sustained positions above its 200-day moving average—the mean closing value spanning the prior 200 sessions—signaling ongoing momentum behind the currency’s rebound.
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Originally published at https://www.coindesk.com/daybook-us/2026/09/17/optimism-creeps-back-into-crypto-with-the-2022-test-still-to-come.
