Bitcoin’s first rate hike since 2023 may be only the beginning – Can BTC recover?

The Bitcoin [BTC] price has been in decline since the 4th of September. The $80k level, and then the $76k level on Tuesday, the 15th of September, were lost as the market reacted to the increased odds of a Federal Reserve rate hike decision.

There were projections for another rate hike, and no cuts in 2027. These factors were expected to pressure crypto. A risk-off sentiment due to rising inflation and tightening liquidity conditions could threaten the nascent Bitcoin recovery.

Investors need to pay attention to the first rate hike since 2023

The 2026 Personal Consumption Expenditures inflation is projected to be at 3.7% for 2026, and is not expected to return to the 2% target till 2029. According to Santiment, traders were “overwhelmingly prepared for exactly what happened” with this rate hike.

The isolated rate hike decision was not a big worry for traders. Rather, the possibility that this could be the beginning of another quantitative tightening cycle is what should worry the crypto market participants.

Another hike later this year would matter more than the latest rate hike. If inflation remains stubbornly high and oil prices remain elevated, Bitcoin and altcoin markets will face a difficult time.

Has Bitcoin flipped bearish?

The Bitcoin Bull Score Index fell into bearish territory with a score of under 40. The rate hike news sent the score into decline, short-term holders are sending BTC to exchanges at a loss, and demand is not showing up, noted crypto analyst Darkfost.

The S&P and Nasdaq fell by 0.8% after the rate hike news, and the market is demanding a higher risk premium.

For Bitcoin in particular, its recent price decline was only part of the broader bearish crypto market trend this year. Since October 2025, when BTC made its all-time high, the Bitcoin 1 to 2 year supply has been rising.

Historically, BTC has only resumed its upward price trend once this supply metric has started to decline.

A market that expects tightening liquidity conditions might put further selling pressure on BTC in the coming weeks. It brings up the uncomfortable possibility that the true crypto market bottom might not have formed yet.

Final Summary

• Bitcoin has been relatively stable following the rate hike news. In the long-term, stubborn inflation could bring more rate hikes and hawkish policy.
• Tightening liquidity conditions would place a higher risk premium on crypto assets, making a true recovery harder.