Crypto Tumbles After Fed’s Hawkish FOMC

The Federal Reserve left the federal funds rate at 3.50%–3.75% on Wednesday at Chair Kevin Warsh’s first FOMC meeting and adopted a firmer policy stance. The committee raised its median year‑end 2026 rate forecast to 3.8% from 3.4% in March and removed language that had signaled an easing bias. Warsh told a press conference the Fed will “deliver price stability,” and he did not submit a dot for his own projection.

Markets reacted quickly. The two‑year Treasury yield rose more than 16 basis points to about 4.22%. Traders repriced the odds of a September rate increase to roughly 70% and placed about an 88% chance of at least one hike by December. Expectations for rate cuts in 2026 fell to near zero. U.S. equities slipped in the immediate aftermath, with the Dow falling more than 500 points at one stage.

Cryptocurrencies and related securities also moved lower. Crypto benchmarks declined about 1% overall after the Fed announcement. Bitcoin traded near $64,000, Ether around $1,749 and Solana near $72. MicroStrategy shares fell about 5% and the company’s Strategy X token hit a new low near $89. A post from the Strategy X account said it has “32 years of dividend coverage through our BTC reserve.” Bitcoin exchange‑traded funds recorded roughly $82 million in net outflows on Wednesday; Ether ETFs saw about $29 million in outflows.

The Fed’s updated projections and Warsh’s comments coincided with broader market developments affecting digital assets. Illinois Governor J.B. Pritzker signed a budget that includes the Digital Asset Privilege Tax Act, which imposes a 0.2% tax on certain brokered digital asset transactions and holdings effective Jan. 1, 2027. The law requires brokers, exchanges and custodians that handle Illinois customers to register with the state and remit the tax; the provision applies to out‑of‑state brokers once Illinois sales exceed $100,000 and is projected to raise about $60 million. Several industry groups have indicated they will pursue legal challenges.

Other industry actions this week include the CME Group suing the Commodity Futures Trading Commission over approval of U.S. perpetual futures, the launch of on‑chain credit ratings for Solana by a major ratings firm, and large financial firms entering the stablecoin market with reserve‑management products.

Fed officials’ revised projections showed a willingness to keep policy tighter for longer to bring inflation toward the 2% goal. Investors and market participants noted the updated guidance and will track upcoming economic data and future FOMC communications for further signals on the policy path.