> ## Content Index > Fetch the complete content index at: https://bullquill.com/llms.txt > Use this file to discover other available public pages before exploring further. # How does the Fed affect bitcoin? 5 channels explained - URL: https://bullquill.com/how-fed-rate-decisions-affect-bitcoin/ - Published: 2026-10-25T00:17:30.000Z - Updated: 2026-10-25T00:26:02.000Z - Description: Bitcoin moved between a 2.9% fall and a 6.9% rise in the two days after five past Fed decisions. Here is how real yields, the dollar, liquidity, ETF flows and leverage carry the Fed's signal, and what to watch on October 28. - Author: Rowan Ashby - Tags: Crypto, Explainer, Bitcoin, Federal Reserve, FOMC, Bitcoin ETF, #lang-en, #evergreen, #tr-how-fed-rate-decisions-affect-bitcoin ## Key takeaways - The Federal Reserve does not set bitcoin's price, but its decisions reach the market through five channels: real yields, the US dollar, liquidity, flows into spot bitcoin ETFs, and leveraged positioning. - Markets react to the gap between what the Fed does and what traders expected. A hike that is fully priced in can leave bitcoin flat or even higher, as happened after the September 16, 2026 increase. - Across five past decision days, bitcoin's move in the two days after the announcement ranged from a 2.9% fall (December 2024) to a 6.9% rise (September 2026), using FRED's daily Coinbase series. - The FOMC announces its next decision on Wednesday, October 28, 2026, at 2:00 p.m. ET (18:00 UTC). The target range is currently 3.75% to 4.00%, and this meeting brings no new dot plot. - Other forces often matter more. One of bitcoin's sharpest drops of 2022, about 23% in two days, came with the collapse of the FTX exchange, not with a Fed meeting. ## How does the Fed affect bitcoin? How does the Fed affect bitcoin? Indirectly, through five channels: real yields, the US dollar, liquidity, spot bitcoin ETF flows and leveraged positioning. Markets react to the gap between what the Fed does and what traders expected. The next FOMC decision is due October 28, 2026. Bitcoin pays no interest and has no earnings. It has no central bank of its own. That makes it unusually sensitive to the price of money elsewhere. When holding cash or Treasury bonds pays more, the opportunity cost of holding a zero-yield asset rises. When money is cheap, investors tend to take more risk. None of these links is mechanical, and the sections below show where they have broken down. ## The five channels from the Fed to bitcoin ### 1\. Real yields: the cost of holding an asset that pays nothing The real yield is the return on a Treasury bond after inflation. The most watched measure is the 10-year Treasury Inflation-Protected Securities (TIPS) yield, which the St. Louis Fed publishes on FRED as series DFII10\. When the Fed raises rates or signals more hikes, real yields usually rise. A higher guaranteed real return makes speculative assets such as bitcoin less attractive by comparison. The 2021–2022 cycle is the clearest example. On November 8, 2021, the 10-year real yield stood at −1.11%, according to FRED. By November 7, 2022, it was 1.69%, a swing of 2.8 percentage points. Over roughly the same year, FRED's Coinbase bitcoin series fell from $67,510 to below $16,000. The link is loose over shorter periods. After the Fed's September 2026 hike, the real yield climbed from 2.62% on September 15 to 2.95% on October 5\. Bitcoin rose over the same weeks. When the real yield then eased to 2.64% by October 22, bitcoin fell. For background on how yields are set, see Bullquill's [10-year Treasury yield explainer](https://bullquill.com/treasury-yields-explained-10-year/). ### 2\. The US dollar Bitcoin is priced mainly in dollars. Higher US rates tend to attract capital into dollar assets and push the currency up. A stronger dollar tightens financial conditions worldwide, especially for borrowers outside the US, and it has often coincided with weaker crypto prices. The Fed's own nominal broad dollar index (FRED series DTWEXBGS) rose from 118.88 on September 15, 2026, the day before the hike, to 122.00 on October 14\. That is a gain of about 2.6% in a month. A rising dollar does not cause a bitcoin decline on any given day, but it is part of the backdrop traders weigh. ### 3\. Liquidity and risk appetite Rate cuts and asset purchases add liquidity to the financial system. Hikes and balance-sheet reduction drain it. In its September 16, 2026 statement, the Committee said only that it would keep reserves in the banking system "ample", so balance-sheet language is one detail to check on October 28. Liquidity cuts both ways. In March 2020, between the Fed's two emergency cuts, a global rush for cash hit every risky asset. FRED's Coinbase series shows bitcoin at $7,957 on March 11, 2020, and $4,980 the next day, a fall of about 37% in one daily reading. The Fed then cut its target range to 0% to 0.25% on Sunday, March 15\. Bitcoin recovered over the following months as liquidity returned, though other factors also played a part. ### 4\. Spot bitcoin ETF flows A growing share of bitcoin demand now comes through US-listed spot bitcoin ETFs, which advisers and institutions can hold alongside stocks and bonds. Investors who manage bitcoin inside a wider portfolio tend to respond to the same rate signals as the rest of that portfolio, so a hawkish Fed surprise can show up in fund flows within days. Flows were already weak going into this week's meeting. US spot bitcoin ETFs saw $635 million of outflows on October 22, according to Farside Investors data cited by CoinDesk, which put the funds' average cost basis at about $82,313\. Bullquill's [guide to bitcoin ETF flows](https://bullquill.com/bitcoin-etf-flows-explained/) explains how to read the daily figures. ### 5\. Leverage and liquidations Crypto derivatives let traders bet with borrowed money. Around big events such as an FOMC decision, a fast move can trigger forced selling or buying of leveraged positions, which exaggerates the first reaction. On October 24, 2026, when bitcoin slipped below $80,000 on Middle East news, CoinGlass data showed about $291 million of liquidations in a single hour, roughly 94% of them long positions, as reported by KuCoin News. Our [crypto liquidations explainer](https://bullquill.com/crypto-liquidations-explained/) shows how these cascades work. ## What history shows around FOMC decision days The table compares bitcoin's daily reading on the day before five notable announcements with the reading two days after. It uses the Coinbase Bitcoin series (CBBTCUSD) on FRED. FRED's daily stamp does not mark the exact minute of the Fed statement, so treat these windows as approximate. __Bitcoin around five Fed decisions. Rate data: Federal Reserve. Price data: Coinbase via FRED (CBBTCUSD), retrieved October 25, 2026__ | Announcement | Decision | New target range | BTC, day before | BTC, 2 days after | Change | | ------------ | -------------------------- | ---------------- | --------------- | ----------------- | ------ | | Mar 15, 2020 | Emergency cut, 100 bp | 0%–0.25% | $5,183 | $5,362 | +3.5% | | Mar 16, 2022 | First hike of cycle, 25 bp | 0.25%–0.50% | $39,361 | $41,806 | +6.2% | | Sep 18, 2024 | Cut, 50 bp | 4.75%–5.00% | $61,769 | $63,363 | +2.6% | | Dec 18, 2024 | Cut, 25 bp | 4.25%–4.50% | $100,151 | $97,230 | −2.9% | | Sep 16, 2026 | Hike, 25 bp | 3.75%–4.00% | $75,656 | $80,844 | +6.9% | Two patterns stand out. First, the direction of the rate move did not decide the direction of bitcoin. The first hike of 2022 and the hike of September 2026 were both followed by gains, while a cut in December 2024 was followed by a fall. Second, apart from the 2020 emergency cut, these were moves markets had largely expected. That fits the common view that guidance about future rates matters more than the move itself. Bitcoin was already falling into the December 2024 decision, and the drop continued afterward. The Fed's table of rate changes lists the date a new range took effect, which is usually the day after the announcement. The dates above are announcement dates. The record also shows that crypto-specific shocks can swamp monetary policy. One of the sharpest drops of the 2022 bear market came in early November, when FTX collapsed. FTX filed for Chapter 11 bankruptcy on November 11, 2022, according to the Louisiana Office of Financial Institutions. FRED's series shows bitcoin at $20,579 on November 7 and $15,851 on November 9, a drop of 23% in two readings. A Fed hike had come the week before, but the exchange failure was the trigger. ## Why the surprise matters more than the decision Traders price expected decisions in advance through fed funds futures. The CME FedWatch tool turns those prices into probabilities. A move that markets see as nearly certain is usually reflected in bitcoin before the announcement, so the reaction comes from anything unexpected: a different decision, a dissent, new wording or a change in tone. Expectations for October have swung. CME FedWatch put the chance of an October hike at 18.3% on October 8, according to a BeInCrypto report published by Yahoo Finance. After hot September inflation data on October 14, the probability briefly rose to about 37% to 44% during that day, the same outlet reported on October 16\. By October 23, CoinDesk said investors "overwhelmingly" expected the Fed to leave rates unchanged. These figures are market estimates, not Fed forecasts, and they change daily. ## What to watch on October 28, 2026 __October 2026 FOMC checklist. Sources: Federal Reserve meeting calendar and Sept. 16, 2026 statement__ | Item | Detail | Why it matters for bitcoin | | ----------------- | ------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------- | | Decision | Statement at 2:00 p.m. ET (18:00 UTC), Wednesday Oct. 28; current range 3.75%–4.00% | A surprise hike would test the real-yield and dollar channels at once | | Statement wording | September said inflation "remains elevated" and uncertainty is elevated, partly from geopolitics | Changes in these phrases signal the next step | | Vote | September was 12–0 | A dissent would show a divided Committee | | Dot plot | None at this meeting; next projections on Dec. 8–9 | Guidance must come from the statement and the chair's remarks | | Chair's remarks | Kevin Warsh, sworn in as chair on May 22, 2026 | Hints about December can move prices more than the decision | | Balance sheet | Current policy is to maintain "ample" reserves | Any change affects the liquidity channel | | Next data | Q3 GDP and September PCE inflation, Oct. 29, 8:30 a.m. ET | Can reverse the first reaction within a day | The press conference, if held, usually begins half an hour after the statement. Crypto trades around the clock, so the first reaction often comes in the minutes after 18:00 UTC, while US stock markets are still open. For the full schedule of this week's Fed, ECB and Bank of Japan meetings, see Bullquill's [central bank meeting calendar](https://bullquill.com/central-bank-meeting-calendar-2026-2027/), and for the inflation-versus-jobs debate behind the decision, read [why the Fed is weighing another hike](https://bullquill.com/fed-october-meeting-rate-hike-debate-explained/). ## What it means For bitcoin, the Fed matters mainly through expectations. A decision that matches market pricing tends to have a short-lived effect, while a change in the expected path of rates can shift real yields, the dollar and fund flows for weeks. Recent history also shows bitcoin can rise after a hike and fall after a cut, which is why a single Fed day is a poor guide to its direction. This October, the Fed is one input among several. Bitcoin is trading near $80,000 after war-related headlines, ETF outflows and rising oil prices, as Bullquill reported in [why bitcoin fell below $80,000](https://bullquill.com/why-bitcoin-fell-below-80000/). What remains unknown is whether the Committee will treat the energy-driven inflation jump as temporary and how strongly it will point toward December. Those answers, not the October rate decision alone, are likely to shape how this week's meeting is read. ## Frequently asked questions ### Do Fed rate hikes make bitcoin fall? Not reliably. Hikes tend to raise real yields and strengthen the dollar, which can weigh on bitcoin, but expected moves are usually priced in beforehand. Bitcoin rose in the days after the Fed's hikes in March 2022 and September 2026, according to FRED's Coinbase price series. ### When is the next Fed rate decision? The FOMC meets on October 27–28, 2026, and the statement is due on Wednesday, October 28, at 2:00 p.m. ET (18:00 UTC). The last meeting of 2026 is on December 8–9 and includes new economic projections. ### Why do real yields matter for bitcoin? Bitcoin pays no interest. When the inflation-adjusted yield on Treasury bonds rises, the cost of holding a zero-yield asset rises too. The 10-year real yield moved from -1.11% in November 2021 to 1.69% in November 2022, a period in which bitcoin lost most of its value. ### Does the October 2026 Fed meeting include a dot plot? No. The Fed publishes its Summary of Economic Projections, including the dot plot, four times a year. In 2026 those meetings are March, June, September and December, so the next dot plot comes on December 9. ## Sources - [Federal Reserve: FOMC meeting calendars, 2026–2027](https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm) - [Federal Reserve: FOMC statement, September 16, 2026](https://www.federalreserve.gov/newsevents/pressreleases/monetary20260916a.htm) - [Federal Reserve: Open market operations and history of target range changes](https://www.federalreserve.gov/monetarypolicy/openmarket.htm) - [FRED, St. Louis Fed: 10-Year Treasury Inflation-Indexed Security yield (DFII10)](https://fred.stlouisfed.org/series/DFII10?ref=bullquill.com) - [FRED, St. Louis Fed: Nominal Broad U.S. Dollar Index (DTWEXBGS)](https://fred.stlouisfed.org/series/DTWEXBGS?ref=bullquill.com) - [FRED, St. Louis Fed: Coinbase Bitcoin (CBBTCUSD)](https://fred.stlouisfed.org/series/CBBTCUSD?ref=bullquill.com) - [CoinDesk: Live updates, ETF outflows and cost basis (Oct. 23, 2026)](https://www.coindesk.com/markets/2026/10/23/live-updates-bitcoin-holds-above-usd81-000-as-the-ai-rout-fades-and-oil-climbs?ref=bullquill.com) - [KuCoin News (CoinGlass data): BTC falls below $80,000, $291M in liquidations in one hour](https://www.kucoin.com/news/flash/btc-falls-below-80-000-291m-in-liquidations-in-1-hour?ref=bullquill.com) - [Yahoo Finance / BeInCrypto: Fed hike odds drop to 18% (Oct. 8, 2026)](https://finance.yahoo.com/markets/crypto/articles/fed-hike-odds-drop-18-034500528.html?ref=bullquill.com) - [Yahoo Finance / BeInCrypto: Rate hike odds shift after September CPI (Oct. 16, 2026)](https://finance.yahoo.com/markets/crypto/articles/polymarket-bitcoin-rate-hike-odds-153500275.html?ref=bullquill.com) - [Seeking Alpha: Kevin Warsh is sworn in as Federal Reserve chair (May 22, 2026)](https://seekingalpha.com/news/4596371-kevin-warsh-is-sworn-in-as-federal-reserve-chair?ref=bullquill.com) - [Louisiana Office of Financial Institutions: FTX files Chapter 11 bankruptcy](https://ofi.la.gov/ftx-files-chapter-11-bankruptcy/?ref=bullquill.com) This article is for information only and is not investment advice.