Crypto markets rallied Wednesday after the largest rate increase in almost three decades signaled policymakers’ resolve in clamping down on U.S. inflation while suggesting rate hikes of this magnitude would not be common.
Crypto markets sustained the rally triggered Wednesday when the Federal Reserve raised benchmark interest rates 0.75%, the biggest hike since 1994.
Ether was up 9.2% in mid-morning trading U.K. time, and Bitcoin jumped 5.2% in the last 24 hours, according to data from CoinGecko. The platform’s DeFi index, comprising top names in the sector such as Solana and Uniswap, ended its recent plunge as its market capitalization jumped almost 5%.
Investors appeared to be relieved by the Federal Reserve’s action to dampen inflation, which hit 8.6% in May and tipped the S&P 500 into a bear market. The Fed signalled that rate hikes of this magnitude would not be commonplace going forward.
Crypto Tracking Stocks
As they have for months, cryptocurrencies moved in line with stocks, which jumped after the U.S. Federal Reserve raised interest rates by 75 basis points, its largest increase since 1994. Fed Chairman Jerome Powell said another increase of this magnitude would not be likely at the Fed’s next meeting.
Bitcoin and Ether gained more than 2%, with BTC posting its first 24-hour gain in over a week. The S&P 500 gained 1.46% and the Dow Jones Industrial Average rose 1%.
“Today’s 75 basis-point increase is an unusually large one and I do not expect moves of this size to be common,” Jerome Powell, Fed Chairman, said at a press conference after the meeting, according to Bloomberg News.
It was the Fed’s latest bid to kneecap inflation, which hit a 41-year high in May, according to data released last week. That data set crypto prices in a freefall that ended with Wednesday’s Fed meeting.
Bitcoin had fallen to $20,196 early Wednesday, the lowest since December 2020, according to data from CoinGecko. It shot up several hours later, however, and was trading just above $22,600 Wednesday evening.
Ether also shot up after 2 p.m. Eastern, rising from a low of $1,060 to $1,200 several hours later.
Just about every cryptocurrency saw gains Wednesday. Cardano, Algorand, Solana, Polkadot and Uniswap were all up more than 10% Wednesday evening.
Updated market performance on June 16.