Most cryptocurrency prices moved up on Wednesday after the Federal Reserve hiked rates by 0.75 percentage point in a continued effort to ease inflation.
Bitcoin, the most popular cryptocurrency, rose 1.5% to $19,365 at last check, while ethereum was off 0.2% to $1,353, according to CoinDesk.
The reaction from crypto investors was largely muted as bitcoin and ethereum also dipped slightly before reversing course after Fed Chairman Jerome Powell spoke about the latest rate hike.
A major increase in valuation was the 4.1% move up to $54.46 in litecoin.
The Federal Reserve delivered its third major rate hike in succession on Wednesday, raising its target rate by 0.75 point, which is the most aggressive tightening on record.
Powell said he sees "ongoing increases" in the months ahead despite a weaker forecast for the world's biggest economy.
"The path has clearly narrowed based on events outside our control," he said. "We're trying not to make a mistake. The risk of doing too little ... only raises the cost of dealing with it later."
Bitcoin has faced a tumultuous period marked by a drop in value of more than 72% since its November all-time high.
Sharp inflation rates have had a negative impact on stocks and cryptocurrency as well as the broader economy, including wages and costs for food, transportation and housing, Jodie Gunzberg, managing director of New York-based CoinDesk Indices, told TheStreet.
"This largely has a negative impact on stocks and most assets from its negative impact on incomes, the reduced present value of future earnings for stocks (since they are discounted at higher rates), and less money and credit to buy investments," she said.
Today's increase in bitcoin prices came after a recent decline due to reports that the August consumer price index rose 8.3% year-over-year.
"That previous drop in price for bitcoin likely reflected the expectation that the Fed would respond to the high inflation by significantly raising rates this week, which generally strengthens the dollar," Gunzberg said.
Since BTC is priced in U.S. dollars, the rising dollar acts as a headwind and "even more now given the economic situations in Japan and Europe," she said. "Since this has all been going on for some time, it isn't surprising to see little reaction to this Fed's meeting."
Rising interest rates not only reduce money and credit available to buy investments. The rise in rates in the U.S. is driving up demand for the dollar even more, since Japan does not appear to be increasing its rate despite inflation. Europe's economy is struggling with high inflation and a likely recession driven by Russia’s attack on Ukraine, which spiked energy prices, she said.
"As long as the U.S. dollar keeps climbing, it will likely be a headwind for crypto," Gunzberg said.