Crypto Markets Dip as Fed Hints at Future Rate Hikes

Crypto markets are trading on a mildly negative note as investors digest the potential rate hikes from the Federal Reserve. The Fed held rates steady at 3.50-3.75 percent, but hinted at future increases in an effort to combat inflation. This has dampened crypto market sentiment, with BTC trading 1.3 percent lower at $63,972.

The Federal Reserve's Summary of Economic Projections revealed a slightly slower GDP growth projection for 2026 and a higher PCE inflation projection. The Fed expects PCE inflation to jump to 3.6 percent in 2026 from the level of 2.7 percent it had forecast in March. This has led to a decrease in aggregate crypto market capitalization, which shed 1 percent in the past 24 hours to $2.21 trillion.

The likelihood of the Federal Funds rate remaining at the current level by the end of 2026 is only 16 percent currently, down from 20 percent a day ago and 42 percent a week ago. The CME FedWatch tool tracks the expectations of interest rate traders. Bitcoin Spot ETF products in the U.S. witnessed net outflows of $82 million on Wednesday versus net inflows of $10 million on Tuesday.