The Federal Reserve raised its benchmark rate by 25 basis points to a range of 3.75% to 4%, marking the latest Fed hike. Despite this tightening and the failure of the CLARITY Act in the Senate, Bitcoin rallied from below $76,000 to over $86,000. Tom Lee of Fundstrat believes the Fed has reached peak hawkishness, and a shift in inflation calculation could lower reported inflation. The CEO of iTrustCapital noted the crypto winter may be ending as idle client cash is redeployed. Upcoming catalysts include the September 30 core PCE revision and Fed commentary.
The Federal Reserve raised the federal funds target rate by 25 basis points, bringing it to between 3.75% and 4%. This Fed hike occurred after the CLARITY Act failed to pass a vote in the Senate.
Despite these potentially negative events, Bitcoin’s price increased from below $76,000 to over $86,000. The S&P 500 futures also stabilized after a few days of losses.
Tom Lee, head of research at Fundstrat, believes the Federal Reserve has reached peak hawkishness after this hike. He expects a change in how the Fed calculates inflation, which could show lower inflation and lead to a softer tone.
The CEO of iTrustCapital stated that the end of the crypto winter is near and that the firm is beginning to redeploy idle client cash. Goldman Sachs analysts observe the S&P 500 tends to decline about 2% in the three months following a rate hike. Yardeni Research lowered targets as 10-year treasury yields moved through a 5% threshold.
Rising long-duration yields intensify pressures on venture debt, stablecoin collateral, and DeFi lending. The failure of the CLARITY Act leaves the SEC and CFTC without clear delineation for digital assets, leaving enforcement-driven activity intact.
Historically, peak hawkishness followed by a dovish pivot has predicted a rally in high-beta assets including Ethereum and Solana. Upcoming catalysts include the September 30 core PCE revision, which will test the disinflation call.
Fed speakers may dial down hawkishness afterward, providing dovish data points. On-chain signals from Glassnode and ETF flow data from SoSoValue will show whether the move above $86,000 reflects organic demand or short covering.
As stated by Tom Lee Tracker, “TOM LEE SAYS THIS FED HIKE COULD SET UP THE NEXT RALLY”. He believes the market may have already reached peak hawkishness, and upcoming data could give officials room to walk back their stance.
When rate expectations peak and positioning is extended, improving inflation releases can drive what Lee called a “face ripping rally.” If method shifts drive core PCE into 3%, that would bolster the argument that tightening has peaked, potentially reigniting institutional allocation to Bitcoin and broader blockchain infrastructure.
