Highlights
- The Federal Reserve raised its key interest rate by 25 basis points to a range of 3.75%-4% on Wednesday, marking its first increase since July 2023, with a unanimous vote of 12-0.
- Following the announcement, Bitcoin peaked at $76,499 before stabilizing around $76,300, remaining steady as the overall cryptocurrency market maintained a valuation exceeding $2.6 trillion.
- Zcash experienced a significant surge of up to 23%, reaching approximately $1,425 after Matt Huang, co-founder of Paradigm, revealed his firm's stake in ZEC, describing the token as "a private complement to Bitcoin."
On Thursday, Bitcoin hovered around $76,300, showing little change after the Federal Reserve announced its first interest rate increase since July 2023.
The Fed's decision to raise the benchmark rate by 25 basis points to a range of 3.75% to 4% received unanimous support from all 12 members of the Federal Open Market Committee. Prior to the decision, traders had anticipated a 93% likelihood of this hike, according to CME's FedWatch tool.
Myriad: What’s next for Bitcoin? Make your prediction here.In contrast to the relatively calm crypto market, Wall Street reacted more negatively. The Dow dropped approximately 1.2%, while the S&P 500 fell by 0.4% to 0.5% on Wednesday. Earlier in the week, the 10-year Treasury yield surpassed 5%, its highest level since 2007, amid rising oil prices exceeding $100 per barrel due to tensions between Israel and Iran.
As interest rates rise, Treasurys and cash become more appealing compared to non-yielding assets like Bitcoin and gold, which poses a dual challenge for risk assets. Additionally, a hawkish rate hike typically strengthens the dollar.
By Thursday morning, these pressures had eased somewhat, contributing to the steadiness in crypto prices. Long-term Treasury yields fell by about two basis points, and equity futures showed an uptick after Fed Chair Kevin Warsh's comments reassured bond markets regarding the absence of a chaotic spike in yields, while oil prices receded slightly from their recent peaks.
The overall cryptocurrency market capitalization was recorded at $2.63 trillion, with the Crypto Fear and Greed Index positioned at 50, indicating a neutral sentiment, a notable decline from the "extreme greed" levels seen just three weeks prior.
Zcash Stands Out
Among various cryptocurrencies, Zcash experienced a remarkable rise, climbing as much as 23% to approximately $1,425, reaching a multi-year peak. This surge followed an announcement from Matt Huang, co-founder of Paradigm, who shared on X that his firm holds ZEC and has invested in the Zcash Open Development Lab.
Huang characterized Zcash as "a private complement to Bitcoin" and advocated for continued support for its inflation-funded developer fund, especially in light of emerging cyber threats and advancements in quantum computing.
Earlier this year, Zcash saw a 37% increase in May after Tushar Jain of Multicoin Capital disclosed a position in the token, calling it "the cleanest way" to express a thesis centered on privacy concerns related to wealth seizure.
Over the past month, ZEC has surged approximately 160%, while Bitcoin has risen by 18.2% during the same period. Over the last year, ZEC has skyrocketed nearly 3000%, making it the top performer among the leading 10 cryptocurrencies by market capitalization this week.
Performance of Other Major Cryptos
Other cryptocurrencies among the top 50 saw more modest increases. BNB was trading near $724, up 2%, while Solana remained just above $100, reflecting a 3.3% gain. XRP, however, lagged behind at $1.29, up 2% on the day but down over 6% for the week following the failure of the crypto's Clarity Act in the Senate.
This proposed legislation would have legalized most crypto activities in the United States, providing greater clarity for altcoins like Solana and XRP, which are viewed differently from Bitcoin in regulatory terms.
In the past 24 hours, approximately $373 million in crypto positions were liquidated, with short positions making up the larger portion as prices rose in anticipation of the rate decision.
The Fed's median projection suggests the federal funds rate could reach 4.1% by the end of 2026, allowing for one more potential quarter-point increase. The next meeting is scheduled for October 27-28.