Bitcoin shrugs off Fed hike and failed Senate crypto bill

BitGo Research highlighted this resilience, noting that Bitcoin effectively absorbed two major negative catalysts within 24 hours. On September 16, the Federal Reserve raised its target range to 3.75%-4.00%, with updated economic projections suggesting rates could remain elevated longer than investors previously anticipated. Simultaneously, the Senate failed to advance the Digital Asset Market Clarity Act, falling short of the 60-vote threshold needed to proceed.

Historically, Bitcoin has mirrored high-beta risk assets during tightening cycles, often sliding alongside equities as liquidity conditions tighten. However, the latest episode saw a brief dip toward $75,000 before a rapid recovery. Greg Cipolaro, research chief at BitGo, argued that this behavior marks a departure from previous cycles. While gold, equities, and the dollar reacted to the Fed’s messaging as expected, Bitcoin’s subsequent climb above $86,000 suggests that market participants may have already priced in the regulatory and monetary headwinds.

The rebound was bolstered by a significant shift in capital flows. After experiencing nearly $746 million in outflows during the initial volatility, U.S. spot Bitcoin ETFs saw a dramatic reversal, recording $999 million in net inflows on September 21. BlackRock’s IBIT led the institutional demand, contributing roughly $381 million to the total. Despite this momentum, analysts remain cautious; Nansen’s Nicolai Sondergaard noted that Bitcoin continues to move onto exchanges, implying that potential supply remains available should market sentiment shift or momentum falter.