The Federal Reserve is widely expected to raise interest rates Wednesday for the first time since 2023, and markets have already priced the move in. That is exactly what makes the hike itself almost beside the point. The real question, for Bitcoin and broader crypto assets, is what the Fed's updated rate projections say about what comes next.
CME FedWatch data, cited by Reuters, puts the probability of a 25-basis-point increase at 92.7%, up sharply from 61.2% a week ago. A Reuters poll published Monday found 86 of 101 economists surveyed expected the same outcome. At that level of consensus, a quarter-point hike to 3.75% to 4.00% carries little new information on its own.
What the bond market is already saying
Bitcoin entered the decision under pressure. The asset was trading near $75,954 on Wednesday after dropping roughly 4% on Tuesday, according to Reuters, while Ether fell 6.3% in the same session to near $2,411. Both moves tracked a sharp repricing in Treasury yields. The 10-year yield reached 5.041% on Tuesday, its highest level since 2007, before easing to around 4.97%, per official Federal Reserve data. Over the same stretch (September 8 through September 14), the two-year yield climbed from 4.39% to 4.65%. Higher yields raise the return available from government debt and reduce the relative pull of non-yielding assets.
The inflation picture drove yields there. The Fed's preferred measure, the Personal Consumption Expenditures index, has been running at about 3.7% year over year, Reuters reported. Brent crude was trading near $107.10 per barrel on Wednesday, and persistent energy prices have complicated the Fed's path back to its 2% target. Together, those pressures have shifted rate futures toward pricing roughly four additional increases through the end of July 2027, according to Reuters. Thirty-seven of 70 economists in a separate Reuters survey expected at least one more hike by the end of March.
The counterargument is worth taking seriously. Wednesday's move is so thoroughly priced that the marginal risk runs the other way. If Chair Kevin Warsh raises rates but the dot plot implies limited additional tightening, traders who positioned aggressively for a prolonged cycle could face a quick reversal. There is also the smaller but sharper scenario: the Fed holds entirely. With futures above 90%, an unexpected hold would be a significant deviation and could produce sharp moves across bonds, equities, the dollar, and assets including Bitcoin and Polkadot ($DOT).
On balance, the dot plot is the read-through that matters. Warsh has reportedly moved away from explicit forward guidance, which places more weight on how investors parse his language at the 2:30 p.m. ET press conference, scheduled after the 2 p.m. ET decision. The line to watch is whether the updated projections shift materially higher. That is what would extend the yield pressure that has already taken Bitcoin down roughly 4% this week.