The Federal Reserve raised its benchmark interest rate by 25 basis points to a target range of 3.75%-4.00%, as expected, while signalling at least one more hike this year. The decision, alongside Chair Warsh’s reaffirmation of the central bank’s commitment to taming inflation, helped restore confidence in the Fed’s policy stance and supported the dollar. The dollar index reached 100.4, its highest level in one-and-a-half months, and was up nearly 1.3% for the week. The yen weakened after the Bank of Japan raised borrowing costs by 25 basis points, as expected, but two policymakers opposed the move, suggesting future increases may come more slowly than initially anticipated. Grayscale Research says the Fed’s increase is unlikely to cause major changes in Bitcoin or broader crypto markets, describing it as a mid-cycle adjustment rather than the start of a prolonged tightening cycle. Its existing analysis expected one or two additional hikes in 2026, while the latest policy signal points to at least one more hike this year. Grayscale contrasts the decision with the Fed’s 550-basis-point tightening campaign from March 2022 through July 2023, which it says probably weighed on digital assets. The firm also cites the Greenspan Fed’s one-off March 1997 hike, after which the Nasdaq bull market continued. Higher rates may benefit stablecoin issuers through increased cash yields and could direct capital toward tokenized bonds and money-market funds. Bitcoin remains vulnerable to further selling if major support zones fail, while a recovery above recent resistance would weaken the bearish interpretation.