According to latest market data, Bitcoin declined 3% this week as of September 16, bringing its year-to-date performance to approximately 13% down. The cryptocurrency is currently 39% below its October 2025 record high, though it has experienced a broader rebound. Ethereum fell 2% this week and is down roughly 19% year-to-date, now trading about 50% below its record close from August 2025. XRP dropped 7% this week and is down approximately 29% year-to-date, sitting about 63% below its October 2025 record high. An index tracking these three major cryptocurrencies shows Bitcoin currently leading, despite the recent weekly decline.
According to reports from Grayscale, the Federal Reserve's latest 25-basis-point rate hike will not drive major changes in crypto markets. Head of Research Zach Pandl published a note on Thursday stating that the Federal Open Market Committee (FOMC) had raised its target range to 3.75%-4.00% a day earlier. Pandl drew a distinction between the current rate hike and the 550 basis points raised by July 2023 during the March 2022 cyclical shift to contain inflation, arguing that Wednesday's quarter-point move carries no such weight. Cointelegraph reports that the rate hike alone is unlikely to materially alter the investment environment for digital assets. This limited tightening represents a stark contrast to the aggressive monetary policy seen in 2022 that contributed to a crypto bear market. Contemporaneous reporting described a limited immediate reaction from Bitcoin and other major crypto assets after the Fed's decision, consistent with Grayscale's view that the rate increase itself was not a major market disruption.
As reported by Grayscale, Pandl referenced March 1997 when Alan Greenspan's Fed delivered a one-off hike, noting that the Nasdaq bull market continued running. "We believe yesterday's move was a mid-cycle adjustment, not a cyclical change, and we doubt the one or two rate hikes expected for 2026 will lead to much change in capital allocation," Pandl wrote. His assessment was supported by traders this week, with Bitcoin climbing instead of selling off as markets reacted to the rate decision. The market's response demonstrates that crypto investors are treating this rate hike as a temporary adjustment rather than a fundamental shift in monetary policy. Bitcoin briefly climbed above $77,000 on Sept. 17 after touching a monthly low less than 24 hours earlier, while nearly $260 million in crypto short positions were liquidated during the rebound. This contrasts with the previous tightening cycle when Bitcoin faced sustained declines.
According to Grayscale's analysis, while the overall crypto market may remain stable, certain segments will experience uneven effects. Stablecoin issuers such as Circle and Tether collect more revenue when cash rates rise, as higher yields on tokenized bonds and money market funds could pull capital onchain. Pandl noted that "Crypto is diverse, and higher rates affect certain assets differently than others, just like in traditional finance." Bloomingbit reports that higher interest rates could support earnings growth for stablecoin issuers, with both companies managing substantial portions of their stablecoin reserve assets in interest-bearing instruments. The firm also sees higher yields on tokenized bonds and money market funds as potentially encouraging capital to move into blockchain-based financial products. This diversification across crypto segments helps explain why the overall market remains resilient despite varying individual asset performance.
As reported by CME FedWatch data, traders assign 54.2% odds to another increase at the October 28 meeting and 88.2% chance that the range sits higher than today by December 9. A further 40.3% of traders put it at 4.25%-4.50%, representing a 50 basis points increase above the current level. Policymakers are close behind, with projections showing 16 of 18 officials expect at least one more increase in 2026. Pandl's framing faces its real test if the Fed moves again in December, as that decision would show whether crypto markets view this cycle as a temporary adjustment or a fundamental shift in monetary policy direction.
