BTC faces significant cost basis resistance in the range of $83,000 to $86,000.

Written by: Maher, Foresight News

At 2 AM on September 17, the Federal Reserve announced the September FOMC decision, raising the target range for the federal funds rate by 25 basis points to 3.75%—4.00%. All 12 voting members supported the decision unanimously. This marks the first interest rate hike since July 2023 and is the first use of rate hike tools since Kevin Warsh took over as chairman.

The decision itself was not surprising. Prior to the meeting, the CME FedWatch Tool indicated that the implied probability of a 25 basis point hike had risen to over 90%. What was truly being repriced by the market were the economic projections summary (SEP) and dot plot released alongside the decision: Among the 18 officials submitting forecasts, 16 believe there will be at least one more hike before the end of 2026. The latest data on Polymarket shows that the probability of the Federal Reserve not cutting rates this year has risen to 95%.

The median corresponds to an end-of-year rate of about 4.1%, with the same forecast for the end of 2027. The policy interest rate path has been clearly shifted upward, and the trading theme in the crypto market has now changed from "Will they hike this time?" to "How long will high rates be maintained?"

Even before the decision was announced, the crypto market had gradually begun to discount the risk of tightening and regulation into prices. On September 15, the U.S. Senate failed to advance the CLARITY Act, and Bitcoin dropped from around $79,000 at the opening to about $74,900 before consolidating. After the Federal Reserve's statement was released, Bitcoin rose from $75,000 to around $76,000. U.S. stocks closed with the S&P 500 down 0.4% at 7551.81 points, the Nasdaq declined 3.15 points, down less than 0.1%, at 25978.42 points. The Dow Jones fell 631.21 points, down 1.2%, at 51461.90 points, marking a three-month low.

Clear Stance

The policy statement continues to follow the minimalist route taken since Warsh took office. The committee wrote: Economic activity is expanding at a steady pace; uncertainty remains high, partly due to geopolitical factors, but domestic spending is resilient, productivity growth is strong, and capital investment is solid; job growth is keeping pace with labor force growth, and changes in the unemployment rate are minimal; inflation remains elevated. The statement said this action will support a faster return to the 2% target and emphasized that "the committee will deliver price stability."

On the operational side, the interest on reserve balances (IORB) was raised to 3.90%, the primary credit rate was raised to 4.00%, the overnight repo rate to 4.00%, and the overnight reverse repo rate to 3.75%, effective September 17. The balance sheet continues to maintain a "sufficient reserves" framework and no new tapering arrangements were announced.

The dot plot is more hawkish compared to June. The median PCE inflation for 2026 was revised up from 3.6% in June to 3.7%, and core PCE was revised up from 3.3% to 3.4%; real GDP was revised up from 2.2% to 2.3%; the unemployment rate was revised down from 4.3% to 4.1%. Growth and employment forecasts have strengthened, inflation forecasts have risen, leading to an upward shift in the median interest rate. By the end of 2026, the dots are roughly distributed as follows: 12 members correspond to an additional 25 basis point hike, 4 members to an additional 50 basis points, and 2 members believe there will be no further hikes this year.

At the press conference, Warsh took a hawkish stance, firmly closing the marginal dovish expectations. He stated that inflation is too high and has been for too long, and the inflation readings this summer do not tell me that underlying trends have improved substantially; he said the committee must be convinced that underlying inflation is approaching the target at a sufficient pace, and today the committee believes that standard has not yet been met. He also remarked that it is difficult to describe current broad financial conditions as restrictive, thus "marginally withdrawing excessive liquidity released earlier." When asked about the White House's request for rate cuts, he emphasized that the Federal Reserve must stay in its own lane, and independence is a two-way street. The entire press conference lasted about half an hour, one of the shortest since the routine press conference system was instituted in 2011. He clearly stated, "We will abandon rigid forward guidance."

The next scheduled meeting is set for October 27-28, with no new SEP being released. According to the latest Polymarket data, the market bets the probability of the Federal Reserve remaining on hold in October at 55%, and the probability of a 25 basis point hike at 46%.

U.S. President Trump stated on Wednesday that before the Federal Reserve's meeting, he had discussed rate decisions with Fed Chairman Warsh, telling him "vote as you wish." Trump said that since other Fed officials are expected to support a rate hike, Warsh's vote would not change the final outcome, while also expressing hope that the Federal Reserve maintains its independence.

After the Federal Reserve's decision was announced, Trump criticized the Fed's rate hike, claiming that rates are "too high" and accused the Federal Reserve committee of being "unfriendly" towards him. He also stated that he still has confidence in Warsh. Warsh emphasized that current policy decisions are primarily based on inflation remaining high and the resilient performance of the economy and labor market.

Bitcoin's Next Steps

Santiment stated that this rate hike in September has also eliminated one significant uncertainty. Traders spent several weeks debating whether the Federal Reserve would act, and now they know the answer. The next challenge is whether there will be a few more rate hikes, which instead forms a clearer set of catalysts. A decline in inflation, cooling energy prices, weakening economic data, or a drop in long-term yields could quickly lower expectations for further tightening; persistent inflation would be the opposite.

The crypto market has its own catalysts, which may temporarily overshadow macro conditions. The setback of the CLARITY Act has already shown how strongly Bitcoin can respond to specific industry policy changes. This means Bitcoin's next major trend may depend on the intersection of two narratives, rather than just interest rates: whether monetary conditions cease to tighten further, and whether crypto can achieve clearer regulatory footing in the U.S.

Glassnode stated that BTC is currently constrained by a supply wall of long-term holders around the $83,000 to $85,000 range, but investors are still continuing to buy at the current price level. It noted that if BTC breaks below this forming cluster area, the next key level to watch will be $75,000; if it weakens further, a complete retracement to around $60,000 cannot be ruled out. BTC faces significant cost basis resistance in the $83,000 to $86,000 range, with approximately 1.07 million BTC acquired by long-term holders in this range, the densest cost area being close to $85,000.

Li Bi Pool founder Jiang Zhuoer stated that he expects Bitcoin to rebound to $83,000 to $84,000 after dipping below $75,000 following Warsh's speech, followed by a more significant adjustment.

HashKey senior researcher Tim Sun stated that the lack of advancement of the CLARITY Act may extend the market's bottoming process, but the "real pricing mechanism" currently declining is dollar liquidity, not congressional legislation. U.S. Treasury yields are nearing 5% again, energy prices are rising, and inflation pressures are increasing, all tightening financial conditions; even if the act is passed, it will not directly trigger a new bull market.

Arthur Hayes stated on the X platform that hiking rates when government debt levels are high has a stimulating effect: bank reserve income increases, and the income of those holding short-term Treasury bonds will also increase, overall driving more consumption, especially the consumption of financial assets. Hayes believes that although the Federal Reserve stopped RMP purchases in mid-August, when accounting for the bank's balance sheet expansion, the total assets of the Federal Reserve and banks are still growing and creating money. The overall composite effect is still an increase in the money supply; even if the interest rates rise, financial assets will continue to appreciate.