Bitcoin Rally Defies Fed Hike as Oil Lifts Dollar Streak

A hike that was supposed to hurt

When the Federal Reserve lifted its policy rate in mid-September, the textbook reading was simple. Tighter money and a firmer dollar should squeeze speculative assets and commodities. One macro data outlet framed the move as leaving oil and bitcoin "exposed." 5 Four weeks later, the market has not followed that script.

The facts of the decision are not in dispute. On September 16 the Fed raised rates by 25 basis points to a 3.75%-4% target range. 35 It was the central bank's first increase since July 2023, and it came after nine months of holding steady. 13 Minutes from the September 15–16 meeting showed every policymaker backed the move. 5 They also showed that most officials expected another increase would likely be appropriate by year-end, while insisting each meeting would be decided on incoming data. 15 Policymakers' own rate projections rose as well. The first-year projection moved from 3.6% to 4.1%, and the second-year projection rose from 3.4% to 3.9%. 5

Bitcoin moves the other way

Bitcoin has climbed roughly 13% since the September 16 decision, from about $75,600 to near $85,950 as of October 2. 4 The rally came even as the 10-year Treasury yield reached a 2026 high of 5.29%. 4 That is the kind of backdrop that usually pressures risk assets. Over the same stretch, President Donald Trump told Time that the Fed under Chair Warsh should not have raised rates. 4

The rally does not prove bitcoin has become immune to monetary policy. It could reflect positioning, a relief move after a widely expected hike, or flows unrelated to rates. What it does show is that the "higher rates crush crypto" reflex has not held over this window.

Oil and the dollar tell the hawkish story

The traditional channels have behaved more predictably. The Bloomberg Dollar Spot Index is on track for a gain of nearly 3% over four weeks. That would be its longest winning streak in almost two years. 1 Earlier in this run, the currency hit a 16-month high against a basket of peers as traders priced in several Fed increases through the end of next year. 1

Oil is a central driver of those expectations. On October 12, crude climbed after attacks on Saudi Arabia outweighed hopes for better supply. 2 Those hopes had followed Trump's praise for new Russian diesel exports and a Russia-Ukraine energy ceasefire. 2 The logic connecting the two markets is straightforward. Sustained high energy and goods prices could push the Fed to keep tightening while US growth outpaces other wealthy economies. That would widen the rate gaps that tend to move currencies. 2 "There's a lot to be wary of," Dakota Wealth Management's Robert Pavlik said, describing a stock market held in check while it waits for earnings and data. 2

How likely is an October hike?

The next decision comes on October 28 at 14:00 ET. 3 Estimates of another hike vary by source and by date. Polymarket showed a 24.5% chance of a 25-basis-point increase in early October, with "no change" at 74.5%. 4 By October 9, market pricing had fallen to roughly 16%-18%. 3 That drop followed weak September payrolls, which shifted the expected next hike toward the December 9 meeting. 3 The consensus base case is now a "hawkish hold": rates stay put, but the door to December remains open. 3

Forecasters still lean toward more tightening over time. Trading Economics' models see the fed funds rate at 4.25% by the end of the quarter. They put it around 4.25% in 2027 and 4% in 2028. 5 Before October 28, the calendar includes the Beige Book on October 14 and a speech by Chair Warsh on October 16. 5

The read

Taken together, the picture is a split market. Oil and the dollar are pricing a Fed that may not be finished. Bitcoin is behaving as if the September hike was a one-off that has already been absorbed. Both views can hold for now because the near-term path favors a pause. Weak jobs data has pushed the next likely move to December. 3

The risk to bitcoin's resilience lies further out. Oil keeps feeding inflation fears, and the 10-year yield is already at a 2026 high. 24 A hawkish hold paired with firm guidance toward December would be a more serious test than the September hike itself. If crude stays elevated on Middle East supply risk, the dollar's streak and yields have room to extend. In that case, the claim that crypto is "exposed" may simply have come too early, not been wrong. A dovish surprise, by contrast, would strengthen the case that bitcoin's rally was pricing an earlier end to the tightening cycle.