The U.S. Federal Reserve raised its benchmark interest rate by 25 basis points to a range of 3.75%-4.00% on Wednesday. The move, marking the central bank’s first tightening step since 2023, immediately triggered forecast revisions across financial institutions, prompting Goldman Sachs to make a 180-degree turn. Previously, the investment bank expected the Fed to pause following the September decision, but it now projects an additional 25-basis-point hike at the October meeting.
Remarks from Fed Chair Kevin Warsh were the primary catalyst for Goldman Sachs’ quick revision. In his comments, Warsh emphasized that current inflation remains “too high” and that Wednesday’s hike merely removed a “dose of accommodation,” implying that policy is not yet sufficiently restrictive. This view aligns with the board’s consensus, where 16 of 18 Fed officials now project at least one more rate hike before the year ends.
Markets Reassess Risk
Traders swiftly reacted to signals of an extending hawkish cycle. CME FedWatch data shows markets are currently pricing in a slightly over 50% probability of an additional 25-basis-point hike in October. Andrew Melville of Block Scholes noted that if that additional move materializes, it would deliver a more hawkish surprise than today’s hike, given that markets had grown accustomed to talk of a rate pause.
Bitcoin’s Anomaly Amid the Market Correction
While the rate announcement sent equity markets lower, Bitcoin responded with a different pattern. The largest cryptocurrency held steady at pre-Fed announcement levels, trading at $76,260, up a modest 0.5% over the past 24 hours at the time of writing. Cooper Duschang of the Talos platform noted Bitcoin’s resilience as an anomaly amid the pullback in traditional financial assets.
However, beneath the stable prices, coin movement data signals caution. Roughly 2,170 Bitcoin flowed into exchanges following the Fed’s announcement, indicating that some investors are moving assets to be ready to sell on short notice. For Bitcoin holders, defending the $76,000 level today offers some relief, but exchange inflows serve as a tangible warning that selling pressure could break out at any time if the probability of an October rate hike materializes.
Sourced from CoinDesk.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
