Grayscale Says Fed's Hike to 3.75%-4.00% Is No Threat to Bitcoin (BTC)

Grayscale's Mid-Cycle Call

Grayscale Research does not expect the Federal Reserve's latest rate hike — nor a possible second increase before the end of 2026 — to materially change how capital is allocated across crypto markets. Zach Pandl, the asset manager's head of research, set out the case in a note published Thursday, one day after the Federal Open Market Committee lifted its target range to 3.75%-4.00%. The quarter-point move left policy well below the peaks of the last cycle, and in Pandl's judgment that distinction is what matters for Bitcoin (BTC) and the wider digital-asset complex. The heart of his argument is a separation between two very different kinds of tightening. When the central bank opened its anti-inflation campaign in March 2022, it ultimately added 550 basis points by July 2023, sharply raising the opportunity cost of parking capital in non-interest-bearing assets — Bitcoin foremost among them, since holding a zero-yield coin became expensive the moment cash paid meaningful interest. Wednesday's move, by contrast, carries no comparable weight in his view. His historical reference point is March 1997, when Alan Greenspan's Fed delivered a one-off increase mid-expansion and the Nasdaq bull market simply carried on. Pandl framed the latest decision as a mid-cycle adjustment rather than a cyclical shift, and wrote that the one or two hikes expected for 2026 are unlikely to change capital allocation in any substantial way. Traders leaned the same direction this week: instead of selling off after the decision, Bitcoin climbed, and our desk reads that divergence as confirmation that tightening fear is no longer the sector's dominant driver.

Odds Point to December

Futures markets largely back Pandl's reading, but they are not pricing a pause. Fed-funds futures assign a 54.2% probability to another increase at the October 28 meeting, and by the December 9 session traders put the chance that the target range sits above today's level at 88.2%. A further 40.3% price the range at 4.25%-4.50% — 50 basis points above where policy stands now. Policymakers are moving in the same direction: the Fed's own projections show 16 of 18 officials expect at least one more increase in 2026, and the central bank's updated 2026-2028 rate path lifts the projected endpoint to 4.1% for next year, versus 3.8% in June, with one more hike this year followed by a single cut by the end of 2028. Twelve of the 18 officials see that additional 2026 hike arriving within the calendar year. Pandl does not claim the sector is immune, only that the effects will be uneven. Stablecoin issuers such as Circle and Tether collect more revenue as cash rates rise, since the reserves backing their tokens earn the higher short-term yield. He also expects rising returns on tokenized bonds and money-market funds to pull fresh capital onchain, sharpening competition with pure yield farming strategies built on lending protocols. Crypto, he notes, is diverse, and higher rates touch some assets differently than others — much as they do in traditional finance. Readers tracking the market in real time can follow live spot and futures prices on Bitget.

the central bank's updated 2026-2028 rate pathhttps://x.com/wallstengine/status/2100284685800902894?ref_src=twsrc%5Etfw

December Is the Real Test

For COINOTAG's desk, the two threads form one story: the market has already accepted the Fed's move as a blip, and the pricing data says the next stress test arrives in December. Sentiment remains constructive rather than euphoric — our aggregate readings put the Fear & Greed Index at 56/100, in Greed territory, with Bitcoin holding 67.7% of the COINOTAG-tracked market and total tracked capitalization near $2.31 trillion. If the FOMC does raise again at the December 9 meeting and Bitcoin's term-premium narrative holds, Pandl's mid-cycle thesis will have survived its first live examination; if risk assets wobble into that decision, the 1997 analogy will need revisiting.