Crypto Market Largely Unmoved After Fed Hikes Interest Rates 0.75%

The crypto asset class seems to have expected the 75 basis point jump and is showing little reaction to the news.

For the third time in a row, the Federal Reserve announced its intent to raise the short-term interest rate on borrowing by another 0.75%. Many economists were expecting that increase and the financial markets largely baked that calculation into their market cap calculus. It seems the crypto market did the same thing, as the total market capitalization across cryptocurrency exchanges barely flinched. It's up 0.17% on the news to $925.79 billion for the digital asset sector, according to CoinMarketCap at time of writing.

However, the single largest and most valuable crypto -- Bitcoin -- was down 1.02% at a price point of $19,321 per coin. This is largely due to the fact that the Fed's rate hike boosted bond yields as high as 4% and the value of the U.S. dollar strengthened as well, which generally hurts Bitcoin.

What's the Fed trying to do?

In August, we saw the rate of inflation (compared to the same time last year) surge to a higher-than-expected level of 8.3%. That was the 15th consecutive month of inflation in mid-single digits. That level of sustained inflation has spurred the Fed to push interest rates higher in an effort to slow down the economy.

In the Fed's statement following its Federal Open Market Committee (FOMC) meeting today, while the central bank patted itself on the back for spurring job growth and low employment -- one of its primary remits as an organization -- it also admitted that it's having difficulties with its other responsibility of curbing inflation due to supply chain issues, price pressures, and higher costs for food and energy.

"We are moving our policy stance purposefully to a level that will be sufficiently restrictive to return inflation to 2%," Fed Chair Jerome Powell said in a press conference immediately following the FOMC meeting.

While Chair Powell did not expressly say how high rates could go before they're "sufficiently restrictive," he signaled during the press conference that further rate hikes can be expected from future FOMC meetings, the next of which is in November 2022.