Bitcoin Holds Steady After Fed Rate Hike as Zcash Surges 19%
Fed Raises Rates for First Time Since 2023 as Markets React
The Federal Reserve raised its benchmark interest rate on Wednesday for the first time since July 2023. The Federal Open Market Committee voted 12-0 to increase the target range by a quarter point to 3.75%-4%.
The decision came with a unanimous vote, unlike the July meeting where three members dissented. The committee's updated projections now show the median rate reaching 4.1% by the end of 2026, up from 3.8% in June. This leaves room for one more rate increase before the year ends.
Bitcoin reacted quickly but briefly to the news. The largest cryptocurrency spiked to $76,499.99 within five minutes of the announcement but gave back those gains within half an hour. It settled at $75,928, up 0.6% over the day but down 2.7% for the week.
Traditional markets reacted differently. The S&P 500 and Nasdaq Composite closed lower, as did gold. The 10-year Treasury yield hit its highest close since July 2007 at 5.01%.
Key Market Numbers
- Bitcoin price: $75,928 (up 0.6% daily, down 2.7% weekly)
- Bitcoin peak after Fed announcement: $76,499.99
- Zcash price: $1,383.30 (up 19.1% in 24 hours)
- Total crypto market cap: $2.68 trillion
- Bitcoin dominance: 56.84%
- S&P 500 close: 7,551.81 (down 0.4%)
- 10-year Treasury yield: 5.01%
What the Fed Statement Says
The Federal Reserve's official statement cited elevated inflation as the reason for the rate hike. The committee said the action will support a "timelier return" to its 2% inflation goal. The statement also noted that job gains have kept pace with workforce growth and unemployment has changed little.
Economic activity is expanding at a solid pace with strong productivity growth and robust capital investment, according to the statement. The rate range now returns to where it stood between October and December 2025.
The last rate cut occurred on Dec. 11, when the Fed cut rates by a quarter point to 3.50%-3.75%. The last increase before Wednesday was July 27, 2023, when rates rose to 5.25%-5.50%.
Crypto Outperforms Traditional Assets
While stocks and gold gave up morning gains and closed lower, crypto markets moved in the opposite direction. Market breadth improved significantly, flipping from 39 gainers at 3 p.m. to 87 gainers by evening.
Zcash was the top performer, surging 19.1% to reach $1,383.30. It opened at $1,110.10 and touched $1,297.77 on Sept. 9, making Wednesday's high the highest level since September 2021. Arbitrum gained 13.9%, while other tokens like Stellar, Solana, and XRP also posted modest gains.
Eighty-seven of the 123 largest non-stablecoin tokens rose in value. However, the total crypto market value had fallen 2.7% over the previous week before Wednesday's recovery.
Bitcoin ETFs See Continued Outflows
U.S. spot Bitcoin exchange-traded funds (ETFs) — investment funds that track Bitcoin's price — continued to see investor money leave. ETFs lost $450.4 million on Tuesday alone.
Fidelity's FBTC accounted for $214.8 million of the outflow, BlackRock's IBIT for $161.7 million, and Grayscale's GBTC for $44.1 million. The outflows over six sessions from Sept. 8 through Sept. 15 totaled $753.2 million, with only one day of inflows.
On-chain data from Glassnode showed that ETF inflows have stalled and stablecoin supply is flat. The True Market Mean — the average price paid by active investors — sits at $76,700, while short-term holders paid an average of $71,300.
Why Zcash Jumped
Zcash's 19% rally came without any official announcement from the Electric Coin Company, which developed the privacy-focused cryptocurrency. The project's blog has not posted since December.
Grayscale filed to convert its Zcash trust into a spot ZEC ETF in November 2025, which may have contributed to investor interest. Zcash trades significantly below its all-time high of $3,191.93 set in October 2016, the month of its launch.
Monero, the other large privacy token, fell 1.2% to $493.50 during the same period, suggesting Zcash's gains were specific to that project.
Senate Clarity Act Fails
The Senate voted 49-50 against taking up the Digital Asset Market Clarity Act on Tuesday, falling 11 votes short of the 60 needed for cloture. The legislation aimed to provide a legislative foundation for crypto market structure that would survive changes in presidential administrations.
XRP and Stellar both dropped following the vote but recovered slightly on Wednesday. Neither Ripple nor the Stellar Development Foundation published statements about the legislation.
Market Sentiment Remains Neutral
The Crypto Fear & Greed Index read 51 on Wednesday, indicating neutral sentiment. This represents a significant drop from 69 on Tuesday and 57 on Monday. The index has now fallen to its lowest level since Aug. 19.
Andreja Cobeljic, head of derivatives trading at AMINA Bank, noted that while the Act was about longevity for crypto regulation, the regulatory direction itself continues to move forward despite the setback.
