Grayscale: Further Fed Hikes Unlikely to Reshape Crypto Markets

According to Grayscale, the Federal Reserve's most recent rate increase will not lead to significant shifts in the crypto market. A second hike in 2026 would also have limited effect.

On Thursday, Head of Research Zach Pandl released the note. The FOMC had increased its target range to 3.75%-4.00% one day prior.

Why 1997 Matters More Than 2022

Pandl compared two distinct Fed actions. The central bank started a cyclical shift in March 2022 aimed at curbing inflation.

By July 2023, rates had gone up 550 basis points. That increased the opportunity cost of holding Bitcoin (BTC) and similar non-interest-bearing assets.

He argues that Wednesday's quarter-point increase does not have that kind of impact. This week, traders agreed with Pandl as Bitcoin rose rather than declined.

He points to March 1997, when Alan Greenspan's Fed implemented a single rate hike. The Nasdaq bull market continued.

“We believe yesterday’s move was a mid-cycle adjustment, not a cyclical change. And we doubt the one or two rate hikes expected for 2026 will lead to much change in capital allocation,” Pandl wrote.

Pandl acknowledges that the impact within crypto is uneven. Stablecoin issuers like Circle and Tether see higher revenue when cash rates increase. Higher returns on tokenized bonds and money market funds could also attract onchain capital.

“Crypto is diverse, and higher rates affect certain assets differently than others, just like in traditional finance,” he added.

Traders Put 88% Odds on Another Hike by December

According to CME FedWatch data, traders see a 54.2% probability of another rate hike at the October 28 meeting.

For the December 9 meeting, traders estimate an 88.2% likelihood that the rate range will be above the current level. Additionally, 40.3% expect it to be at 4.25%-4.50%, which is 50 basis points higher than today.

Policymakers are not far off. Projections indicate that 16 out of 18 officials anticipate at least one additional hike in 2026.

FED LIFTS PROJECTED RATE PATH ACROSS 2026-2028

The Fed now projects one more hike this year, followed by one cut by the end of 2028.

2026: 4.1% vs 3.8% in June
2027: 4.1% vs 3.6%
2028: 3.9% vs 3.4%
Long run: 3.2% vs 3.1%

12 of 18 officials expect another hike this year.

— Wall St Engine (@wallstengine) September 16, 2026

Pandl's analysis will be truly tested if the Fed acts again in December. That move would indicate whether the crypto market sees this cycle as a temporary blip or a turning point.