Bitcoin extended its recent decline after the Federal Reserve raised interest rates by 25 basis points, taking the benchmark range to 3.75% to 4.00%. BTC has lost more than 3% over three trading days as a stronger dollar and further tightening expectations pressure risk assets.
The increase marked the Fed’s first rate hike in more than three years. Markets now price in another 75 basis points of tightening over the next six months.
Before the decision, markets assigned more than a 90% probability to a rate increase. This positioning reflected expectations for a more aggressive policy stance from the central bank. Higher US rates can increase demand for bonds and support the dollar. At the same time, tighter financial conditions can reduce liquidity available for risk assets, including Bitcoin.
The dollar had already strengthened before the policy announcement. The DXY Index continued to rise toward 100, an area that attracted notable buying interest during recent sessions.
A stronger dollar can also compete with Bitcoin for capital. Investors often seek dollar-denominated assets when higher interest rates increase potential returns from the US bond market.
Bitcoin demand has shown signs of slowing as the dollar strengthens and rate expectations remain firm. As a result, short-term selling pressure has continued across BTC.
Open interest recently climbed to about USD 25.5 billion across exchanges. The indicator tracks outstanding long and short positions and therefore shows increased participation in Bitcoin derivatives.
Yet rising open interest alongside falling prices can also coincide with greater bearish positioning. The pattern comes as Bitcoin remains sensitive to changing liquidity and interest-rate expectations.
History suggests the Federal Reserve rarely stops after one increase. Since 1994, the central bank has gone “one and done” only once. Single increases have also remained uncommon across the 12 tightening cycles since 1955. Meanwhile, current market pricing points toward another 75 basis points of tightening within six months.
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Bitcoin offers a much shorter record for comparison. The cryptocurrency traded through the tightening cycle that began in 2015, although thinner liquidity makes that period less comparable to today.
The 2022 cycle provides a closer reference because Bitcoin had developed a more mature market structure. BTC peaked near USD 69,000 in November 2021 before falling about 40% ahead of the March 2022 hike.
Today, Bitcoin also trades around 40% below its October high of USD 126,000. The decline places BTC near a drawdown level similar to the one seen before the 2022 tightening cycle began.