Bitcoin Drops 3% to $75,800 Ahead of Fed Rate Decision

Bitcoin (BTC) has fallen to $75,800 (approximately KRW 130.8 million), with the upcoming U.S. Federal Reserve interest rate decision and Chair Powell's press conference set as key market-moving events. Bitcoin dropped around 3% over the past 24 hours on October 16.

CoinDesk reported that a 25bp (0.25 percentage point) rate hike expectation is already priced into the market, so if Chair Powell does not deliver a hawkish message aligning with further increases, markets could be disappointed. The Fed meeting concluded on October 15-16, with the interest rate decision scheduled for 3:00 AM KST on October 17 and the press conference at 3:30 AM KST.

Robin Brooks of the Brookings Institution noted in a post on October 5 that while markets had priced in a 62% chance of a 25bp hike, he estimated it at 40%. He argued that while inflation and labor market conditions may not require rate hikes, stabilizing long-term Treasury yields might necessitate them. Brooks emphasized that the Fed's press conference message is more critical than the interest rate level itself, as Chair Powell may struggle to meet all market expectations for further tightening.

If the message falls short of expectations, Brooks warned, the dollar could weaken and long-term rates rise. The market interpretation of the Fed's communication—whether it focuses on inflation control or Treasury yield stability—will shape reactions in dollars and risk assets. Generally, rising interest rates and bond yields pressure Bitcoin, as investors shift toward income-generating assets like cash or bonds.

However, if long-term rate increases stem from inflation concerns, fiscal burdens, or Fed credibility issues rather than economic strength, Bitcoin and gold could be viewed as store-of-value or risk-hedging assets. Market interpretation of the Fed's path extends beyond whether rates rise: even a 25bp hike may lead to different dollar and risk asset reactions depending on whether future hikes are signaled or how inflation and Treasury yields are prioritized.

Bitcoin's decline was also influenced by the failure of the U.S. Senate's virtual assets market structure bill, the CLARITY Act, which failed a procedural vote 49-50 on October 15 due to falling short of the required 60 votes. However, this does not necessarily mean the bill's final demise.

Market focus now centers on the Fed rate decision and press conference, as well as the Senate's virtual assets legislative process—two distinct developments that could affect Bitcoin prices through different channels: monetary policy and regulatory frameworks. Similar to September's Fed meeting, where both interest rates and communication influenced bond yields, dollars, and Bitcoin, this event will likely follow a similar pattern.