The Federal Reserve raised interest rates on Wednesday for the first time since 2023, briefly sending the bitcoin price in several directions at once. The volatility proved short-lived: bitcoin quickly settled and currently sits a modest 1% higher over a 24-hour period.

According to the crypto research team at asset manager Grayscale, the leading digital asset is unlikely to be bothered by the Fed's decision.

"We believe yesterday's move was a mid-cycle adjustment, not a cyclical change," wrote Zach Pandl, the firm's head of research, in a Thursday note. "And we doubt the one or two rate hikes expected for 2026 will lead to much change in capital allocation."

Bitcoin has — in the past, though not always — performed well in a low interest rate environment, and previous rounds of Fed tightening have often coincided with declines in the price of the leading digital asset. Low interest rates mean more liquidity for investors to take on risk and buy assets such as bitcoin.

Pandl added that when the Fed began ramping up interest rates in 2022 to contain inflation, the policy "probably weighed on the price of bitcoin" because it "meaningfully affected the opportunity cost of holding non-interest-bearing assets." The mechanism is straightforward: assets like bitcoin pay no yield, so higher returns on cash and Treasuries raise the bar for holding them — a dynamic Pandl expects to be muted this time, given the limited hikes expected in 2026.

This time, however, feels more like 1997, Pandl argued, when the Federal Reserve carried out a one-off hike and the Nasdaq kept moving higher.

Bitcoin's price recently stood at close to $76,581, up 18% over the past 30 days. The asset benefited in August from news that the U.S. Treasury would at least double the size of its liquidity-support buyback operations, in which the government repurchases outstanding securities to support liquidity in the market for its debt.

The United States is currently in the grip of an affordability crisis, with inflation squeezing households as oil prices surge.

Federal Reserve Chair Kevin Warsh said the central bank was focused on bringing down inflation. "The plain fact is that inflation is too high, and has been for too long," he said on Wednesday.

U.S. President Donald Trump has repeatedly said he wants interest rates to be lower. Writing on his Truth Social platform on Wednesday, he said: "Interest Rates in the United States should be 1%, or less, because we are the Best Credit in the World — BY FAR."

That divergence — a White House pressing for rates at 1% or less alongside a central bank focused on bringing inflation down — frames the policy backdrop for Grayscale's call, with the question of whether the Fed follows through on the one or two hikes expected in 2026 likely to remain in focus for market participants.

This article first appeared on Bitcoin Magazine and is written by Mathew Di Salvo.