Core Question

Why are rate hikes not putting pressure on crypto and other assets like it has historically?

Background

With the recent rate hike from the Fed, cryptos surged, with SOL up over 10% and BTC over 7% and similar numbers across the board since the hike. But, this isn't what is supposed to happen, so why did it happen?

History

Historically, when the Fed raises interest rates, non yielding assets such as crypto, gold and silver, and sometimes stocks, all dip somewhat. This is because raising interest rates makes more investors interested in government bonds, since they pay more. That tends to move people out of other assets by selling, resulting in a price drop, however, that is not what happened this week. 

What actually happened

It was announced that the Fed raised interest rates at 2PM ET on Wednesday, September 16. Since there were predictions of a hike, with over 90% of analysts agreeing on a 25 basis point increase, the market had already adjusted and had pulled back slightly. That means that when the news was confirmed, we didn't experience a bigger of a drop as your typical everyday occurrence. 

Then, on September 18, 2026, major assets surged. While the stock market was more or less flat, gold and silver hit weekly highs, while crypto had a large rally, with BTC rising by over 6%, ETH by 7% and SOL by over 12%. The biggest gainer was UNI (Uniswap), gaining 31% with about $2 billion trading volume. 

This gain was caused by oil prices dropping by 5% and due to the fact the 10 year treasury bills edged away from the critical 5% mark. Fed chair's Kevin Warsh's comments also caused this, due to his justification and the fact that this is more of a one time thing to cool short term inflation, meaning we are less likely to get more interest hikes. This put some more confidence into investors. Another big factor was about 48 hours after the Clarity Act failed to pass, SEC enacted an Innovation Exemption. This allowed tokenized stocks to be traded on blockchains, with some limits. 

To recap

This shows that crypto prices are based on multiple other things apart from just the Fed and demand. Other economic decisions and other assets have a price impact. This is also a great proof to diversify your portfolio. If you are diversified with some money into crypto (instead of having everything in say SP500), you can experience these huge growths while staying safe.

Important

While this is great for crypto, this doesn't mean that you should just go with a crypto heavy, or even worse, a crypto only portfolio. These are just the gains, you have to zoom out and not think just about growth but about downside and risks too. You don't want to essentially "gamble" on more of these days with money you can't afford to lose.