Bitcoin moved higher on Thursday, extending its recovery from the sharp selloff earlier in the week.
The decline had followed the US Senate’s failure to pass the Clarity Act, a major piece of cryptocurrency legislation. However, Bitcoin’s rebound remained limited as investors assessed the Federal Reserve’s first interest rate increase in three years and the prospect of further monetary tightening.
The Bitcoin price rose around 0.7% to $76,498, showing only a modest reaction to the Federal Reserve’s latest decision.
Bitcoin Reacts to Hawkish Federal Reserve
The Federal Open Market Committee voted unanimously to raise the federal funds rate by 25 basis points to a range of 3.75% to 4.00%.
Although the rate increase was widely expected, the Fed’s updated projections delivered a more hawkish message to financial markets.
The latest dot plot showed that at least 12 FOMC members expect another interest rate increase during the year.
Fed Chair Kevin Warsh also emphasized that underlying inflation remains elevated. In addition, he suggested that financial conditions were still not restrictive enough to guarantee a sustained return to price stability.
His comments reinforced expectations that US interest rates could remain higher for longer.
Higher interest rates generally create a more challenging environment for speculative assets such as Bitcoin and other cryptocurrencies.
Bitcoin Volatility Remains High After Fed Decision
Bitcoin experienced significant volatility around the Federal Reserve announcement before stabilizing and moving moderately higher.
Ether showed an even larger reaction.
Nexo Dispatch analyst Iliya Kalchev noted that Ethereum continues to display greater sensitivity to major macroeconomic events than Bitcoin.
According to Kalchev, Bitcoin’s price swings around the Fed decision were considerably larger than movements seen in US equity markets.
This highlights the greater volatility that can affect cryptocurrency prices during major monetary policy events.
He also argued that the main source of pressure was not the interest rate increase itself.
Markets had already expected the hike. Instead, investors reacted to the possibility that the latest move could mark the beginning of a broader tightening cycle rather than a one-off adjustment.
SEC Tokenized Stock Rules Support Crypto Sentiment
While the Federal Reserve created pressure for crypto markets, the US Securities and Exchange Commission provided a more positive regulatory development.
The SEC announced an exemption allowing certain companies to offer trading in blockchain-based, or tokenized, stocks and other securities.
The decision could help bring blockchain technology and digital assets deeper into traditional financial markets.
The announcement arrived shortly after the cryptocurrency market was hit by the Senate’s rejection of the Clarity Act.
Bitcoin Recovers From Clarity Act Setback
Bitcoin fell more than 3% earlier in the week after the US Senate failed to approve the Clarity Act in a 49-50 vote.
The legislation was designed to establish a clearer regulatory framework for cryptocurrencies and other digital assets in the United States.
The bill had previously advanced through the Senate Banking Committee. However, it struggled to secure the 60 votes required for passage.
Despite the setback, some crypto industry participants believe US regulators could still introduce parts of a similar framework through their existing legal authority.
Both the SEC and Commodity Futures Trading Commission could play important roles in shaping future crypto regulation.
SEC Opens Door to Tokenized Stock Trading
Under the SEC framework, platforms offering tokenized stocks will receive a five-year exemption from several requirements that normally apply to traditional stock exchanges.
Liquidity providers supporting these blockchain-based securities will also receive temporary relief from certain dealer registration requirements.
However, platforms will need to notify companies before creating tokenized versions of their shares.
If a company objects, the platform will not be permitted to list the tokenized stock.
Supporters of tokenization argue that blockchain technology could significantly change financial markets.
Potential benefits include 24-hour trading, faster settlement, improved liquidity and lower transaction costs.
Tokenization could also allow investors to hold assets directly and purchase fractional ownership of shares more easily.
The SEC said the exemption could give companies more flexibility to experiment with tokenized securities while still operating within federal securities laws.
Crypto Prices Rise Alongside Bitcoin
Most major cryptocurrencies followed Bitcoin higher on Thursday.
Ethereum rose around 1.9% to $2,450, while XRP recorded a modest gain.
BNB advanced roughly 1.8%, while Solana climbed around 2.8%. Cardano was among the stronger major altcoins, gaining approximately 3.5%.
Memecoins also moved higher.
Dogecoin added around 1.4%, while the TRUMP token gained approximately 2.2%.
Bitcoin Outlook Remains Tied to Fed Policy
Bitcoin’s recovery shows that traders are gradually moving past the initial shock caused by the Clarity Act setback.
However, the Federal Reserve remains an important factor for the cryptocurrency market.
Additional interest rate increases could continue to limit demand for risk assets. At the same time, progress on tokenization and crypto regulation could provide longer-term support for blockchain adoption.
For now, traders are likely to remain focused on Federal Reserve policy, US inflation, crypto regulation and Bitcoin’s ability to maintain its recent recovery.
