Crypto markets rose after the Federal Reserve lifted rates by 25 basis points on Wednesday, moving against the usual expectation that tighter policy hurts risk assets. Bitcoin added nearly 1% over the past 24 hours, while Zcash (ZEC) jumped more than 23% and hit a new high.
BlockTempo said that reaction stands out because the current setup looks strikingly similar to the opening phase of the 2022 hiking cycle, a period that later turned sharply lower for Bitcoin.
Bitcoin is down 40% from its peak, echoing the 2022 setup
Bitcoin is now about 40% below the $126,000 high it reached in October. The report compared that position with March 2022, when the Fed started its previous rate-hike cycle and Bitcoin was also down roughly 40% from its November 2021 peak.
History does not guarantee a repeat, but the structure looks similar. In 2022, Bitcoin rose 18% in the 12 days after the Fed hike, then slid 50% and stayed under pressure for months. During that stretch, FTX also collapsed.
That leaves the market with a central question: is this post-hike move only a release of pressure, or the start of another bull trap?
ETF outflows diverge from short-term speculative buying
One signal highlighted in the report is ETF flow. After Bitcoin faced selling pressure tied to the failed CLARITY Act push, spot Bitcoin ETFs recorded $746 million in outflows across Tuesday and Wednesday.
According to the report, that suggests institutional money has not fully embraced the idea that rate hikes are positive for crypto. It also contrasts with the short-term rebound being driven on-chain by retail traders and speculative flows.
DXY moves back above 100 while Treasury yields ease
On the macro side, the U.S. dollar index, or DXY, moved back above 100 after the rate hike and remained above its 200-day moving average. A firmer dollar usually tightens conditions for risk assets, the report said, because it points to stricter global financial conditions.
At the same time, U.S. Treasury yields edged lower. The 10-year yield fell to 4.984%, the 30-year to 5.334%, and the 2-year to 4.705%. That gave crypto some room to absorb the pressure from a stronger dollar.
Fed comments and inflation data remain in focus
BlockTempo also cited Fed Chair Kevin Warsh as saying that central banks cannot control individual prices and can only prevent changes in relative prices from spreading. In that framing, the hike was not meant to push down oil or diesel prices, both of which were at new highs, but to keep inflation expectations from getting loose.
Core inflation has fallen to 2.4%, the lowest in five years, while both Brent and WTI crude remain above $100.
Markets are not pricing a one-and-done hike
Since 1994, the Fed has stopped after a single rate increase only once, the report said. Futures markets are now pricing in another 75 basis points of hikes over the next six months, and Goldman Sachs has brought forward its forecast for the next increase to October.
That means the more optimistic script of one hike followed quickly by cuts is not the dominant view in the market right now.
Month-end may be the next real test
The report said some early bullish signs are visible. Zcash has set a new high, and Bitcoin has held its ground despite pressure from regulatory setbacks and the Fed move.
Still, the real test may come at the end of the month. In 2022, late September marked the end of that rebound, about a month and a half after the post-hike rally began. If Bitcoin cannot break resistance by month-end this time, the chances of history following a similar path could rise.
ETF flows are the other key marker. If outflows keep expanding, Bitcoin's resilience on the chart may prove to be a bear trap. If outflows narrow or turn back into inflows, the rebound after the hike could start to look more durable. For now, the report said, those two conditions have not appeared together.