MarketsCryptocurrency Market Surges Following Fed's Initial Rate Hike of 2023

Bitcoin experienced a 0.88% increase within 24 hours, reaching $76,621, as the Federal Reserve indicated only one more rate hike is expected. Meanwhile, Zcash skyrocketed 23% to a new all-time high after Paradigm revealed its investment.

By Oliver Knight|Edited by Sheldon Reback 20 minutes ago Make preferred on

  • The Federal Reserve implemented a 25 basis point interest rate hike, marking the first increase since July 2023. It projected a median rate of 4.1% for both 2026 and 2027, suggesting only one additional hike in that timeframe.
  • Bitcoin is currently valued at $76,621, reflecting a 0.88% gain in the past 24 hours, with 94 out of the 100 CoinDesk 100 assets rising. The CoinDesk 80 index, which includes smaller market cap assets, surged 4.7%, compared to a 1.2% rise for the CoinDesk 5.
  • Zcash surged 23% to nearly $1,369 after Matt Huang, co-founder of Paradigm, announced the firm's ownership of ZEC, alongside a 37.84% increase in futures open interest and negative funding rates.

As of Thursday, Bitcoin BTC $76,326.70 climbed to $76,621, marking a 0.60% increase since midnight UTC and a 0.88% rise in the past 24 hours, as risk assets reacted more to the Fed's projections than to the rate hike itself. Ether ETH $2,433.54 gained 1.1%, reaching $2,444.36, while Solana (SOL) increased by 2% to $100.57.

The Federal Open Market Committee decided to increase the target rate by 25 basis points, bringing it to 3.75%-4%. Chair Kevin Warsh remarked that inflation remains "too high … for too long" and recent data does not indicate significant improvements in underlying trends.

Traders were reassured by the committee's "dot plot" forecast, which indicates a median policy rate of 4.1% at the end of both 2026 and 2027, implying only one further 25 basis point increase, with no extended tightening cycle anticipated.

In response, risk assets rallied, with the Dollar Index falling 0.17%. Nasdaq 100 futures rose by 1.04%, S&P 500 futures increased by 0.81%, and both gold and silver gained 1.02% and 1.52%, respectively. The two-year Treasury yield decreased by 2 basis points to 4.71% after reaching its highest level since 2024 in the previous session.

Unlike earlier in the week when the cryptocurrency market operated independently, it joined the broader rally this time. The recovery across the sector is widespread, particularly among speculative assets, with 94 of the CoinDesk 100 gaining over the last 24 hours and the small-cap CoinDesk 80 advancing 4.7%, in contrast to a 1.2% increase for the bitcoin-centric CoinDesk 5.

However, fund flows are still declining. U.S. spot Bitcoin ETFs experienced an outflow of $295.98 million on Wednesday, following a $450.33 million loss the previous day, according to SoSoValue. Since September 8, outflows have surpassed $1 billion across seven sessions, reducing total net assets to $95.19 billion.

Bitcoin remains 6.9% below its monthly peak of $82,284, achieved on September 4.

Derivatives Positioning

  • Aggregate open interest in crypto futures rose to $64.4 billion from $59.7 billion on Monday, with a 24-hour trading volume of $112.6 billion and $214.3 million liquidated in the past day, according to Coinalyze. This indicates that traders are increasing their exposure in the rally rather than closing short positions.
  • Bitcoin open interest increased by 1.41% to $26.6 billion, while ether open interest grew by 1.39% to $16.7 billion. Ether liquidations totaled $60.7 million compared to Bitcoin's $42.4 million.
  • Zcash (ZEC) is particularly noteworthy, with open interest soaring 37.84% to $2.2 billion within 24 hours; $28.9 million was liquidated, and the funding rate stood at -0.0253%, indicating that shorts were paying longs even as the token reached new highs. Traders have been trading against this rally all month and have faced constant pressure as a result.
  • Bitcoin funding rates are positive and rising, with the aggregate rate at 0.0070% and the predicted rate at 0.0082%. However, there is a wide spread across platforms, from 0.0153% on Kraken to -0.0003% on Huobi.
  • Coinalyze's long/short ratio indicates a bullish sentiment among traders, with a ratio of 1.13. This has remained positive for eight consecutive days after a three-week period of negativity.

Token Highlights

  • The privacy token Zcash (ZEC) rose 23% in 24 hours to approximately $1,369, setting a new record after Paradigm co-founder Matt Huang announced in an X post that the firm holds ZEC and referred to it as "a private complement to Bitcoin," supporting ongoing funding for its developers. This follows a governance vote this week in which holders approved reducing block times from 75 seconds to 25 seconds while maintaining the Bitcoin-style halving schedule, resulting in a market cap of $23.2 billion for Zcash.
  • In contrast, rival privacy coin Monero (XMR) did not benefit from the rally, slipping 0.97% to $494.14 and 1.6% over 24 hours. The disparity between the two has widened, with Zcash now valued at double that of Monero.
  • Among mid-cap assets, NEAR Protocol NEAR $2.8056 surged 16% to $2.82 in 24 hours, with 7.6% of that increase since midnight UTC, while Venice Token VVV $24.86 rebounded 14% to $25.45, recovering above its level prior to Tuesday's Clarity Act vote.
  • Pump.fun PUMP $0.003877 led the CoinDesk 80 index for the day with a 7.9% increase, while perpetuals exchange token lighter (LIT) gained 7% to $4.92, and fartcoin rose by 6.4%, indicating a resurgence of speculative trading after a focus on Bitcoin following the short squeeze in August.
  • CoinMarketCap's “Altcoin Season” indicator has risen, now standing at 39/100 after lingering around 32/100 for much of the week.