The cryptocurrency market rebounded on Thursday as traders interpreted the Federal Reserve’s first interest-rate hike in over two years as a signal of limited further tightening, driving Bitcoin and altcoins higher. The Federal Open Market Committee raised rates by 25 basis points to a 3.75%–4.00% range, citing persistent inflation pressures, though its median projection for policy rates at the end of 2026 and 2027—at 4.1%—suggested only one additional hike. This outlook helped risk assets rally, with the Nasdaq 100 futures gaining 1.04% and gold rising 1.02%, though the Dollar Index fell 0.17% amid broader risk-on flows. Bitcoin climbed 0.88% to $76,621, while Ether rose 1.1% to $2,444.36, and Solana advanced 2% to $100.57. However, the rally was broad-based but more pronounced among speculative altcoins, with 94 of the CoinDesk 100 constituents up over 24 hours, compared with a 4.7% gain for the small-cap CoinDesk 80 versus a 1.2% rise in the bitcoin-heavy CoinDesk 5. Zcash led the charge, surging 23% to a record $1,369 after Paradigm disclosed it holds the token, framing it as a ‘private complement to Bitcoin.’
Despite the gains, crypto’s recovery remains uneven. Spot Bitcoin exchange-traded funds (ETFs) saw outflows totaling $295.98 million on Wednesday, following a $450.33 million loss the prior day, bringing total net assets down to $95.19 billion since September 8. Bitcoin remains 6.9% below its September 4 peak of $82,284. Open interest in crypto futures expanded to $64.4 billion, with $214.3 million liquidated over the past day, though funding pressures persisted. Zcash’s open interest surged 37.84% to $2.2 billion, while Ether’s funding rate turned negative at –0.0253%, indicating short-sellers were paying longs even as the token hit new highs. The long/short ratio in derivatives data was skewed bullish at 1.13, though liquidations remained elevated.
The rally’s speculative underpinnings were evident in mid-cap tokens like NEAR Protocol, which rose 16% to $2.82, and Venice Token, recovering 14% to $25.45. Pump.fun’s PUMP token led gains among the CoinDesk 80 at 7.9%, while perpetuals exchange token LIT added 7% to $4.92. Meanwhile, Monero (XMR) failed to participate, slipping 0.97% to $494.14, widening its gap with Zcash, which now trades at roughly twice its rival’s valuation. The altcoin rally has pushed CoinMarketCap’s ‘Altcoin Season’ indicator to 39/100, up from around 32/100 earlier in the week.
The Fed’s mixed signals—higher rates but a dovish projection—further complicated market expectations. Chair Kevin Warsh emphasized that inflation had persisted ‘too long,’ but the dot plot’s limited tightening outlook suggested traders were betting on a pause in aggressive policy tightening. For now, crypto’s recovery appears tied to risk appetite rather than a sustained bullish trend, with speculative flows driving the most pronounced gains while institutional positioning remains cautious.
