Grayscale Says Latest Fed Rate Hike Is More of a Mid-Cycle Adjustment

Digital asset manager Grayscale said in an analysis released on September 17 that the Federal Reserve's latest rate hike is closer to a mid-cycle adjustment than a major shift in monetary policy. According to Odaily, Grayscale said the move and a possible second hike this year are unlikely to cause major changes in digital asset markets. The Federal Reserve's Federal Open Market Committee raised its target rate range by 25 basis points to 3.75% to 4% on September 16, saying the increase was intended to bring inflation back to its 2% target more quickly. Grayscale noted that the Fed raised rates by 525 basis points from March 2022 to July 2023, while the current environment follows years of hikes, cuts, and pauses. Grayscale said the impact of higher rates will vary by crypto business model. It added that stablecoin issuers may benefit from higher interest income on reserve assets, while higher yields on tokenized bonds and money market funds could attract inflows into on-chain financial products. Bitcoin briefly rose above $77,000 on September 17, and short liquidations across the crypto market approached $260 million during the rebound.