Grayscale Hints at No Major Crypto Shift Despite Fed Rate Hike

Grayscale has stated that the recent Federal Reserve interest rate increase is unlikely to bring significant changes to the cryptocurrency market. The same applies to this year's second hike.

Zach Pandl, Grayscale's research head, released a memo on Thursday following Wednesday's Fed decision to raise its target range for benchmark rates to 3.75%-4.00%. He highlighted differences between two very different Federal Reserve actions: the 2022 March start of rate hikes aimed at curbing inflation and this week's 0.25 percentage point increase, which he considers less impactful.

Pandl referenced a 1997 Fed move under Alan Greenspan when the central bank made a single adjustment without halting Nasdaq's strong market trend. Traders aligned with Pandl's view as Bitcoin rose instead of falling after the rate decision.

Within crypto, Pandl noted that stablecoin issuers like Circle and Tether benefit from higher cash rates, while tokenized bonds and money market funds may see increased on-chain capital inflows if their yields rise. Traders currently forecast a 54.2% chance of another rate hike at the October 28 meeting, with an 88.2% probability of an increase by December 9.