From 2018 to 2026: Structural Comparison Between Interest Rate Repricing Expectations and Bitcoin Cycle Patterns

In the early hours of June 18, 2026, the Federal Open Market Committee (FOMC) of the Federal Reserve unanimously voted 12-0 to keep the federal funds rate target range unchanged at 3.50% to 3.75%. This marks the fourth consecutive meeting where the Fed has held rates steady. The decision itself was widely anticipated—prior to the meeting, the CME FedWatch Tool showed a 99.6% probability that rates would remain unchanged.

However, the market’s repricing after the announcement was nothing short of dramatic.

According to the CME FedWatch Tool, following the FOMC decision, the probability of rates staying unchanged (no hike) in December plummeted from 38.2% before the meeting to just 16.1%. In contrast, the probabilities for rate hikes surged across the board: a 25 basis point hike now stands at 36.4%, a 50 basis point hike at 33.8%, and a 75 basis point hike at 13.7%. In total, the probability of at least one rate hike by year-end has soared to 83.9%.

Source: CME FedWatch

This figure represents a significant jump from the roughly 61% probability priced in before the decision, and it’s almost double the level seen in mid-May, which was around 40%.

The dot plot was the core catalyst for this upheaval. At the March meeting, not a single FOMC official anticipated a rate hike in 2026. But the latest dot plot in June showed that out of 18 officials submitting forecasts, 9 now expect at least one rate hike in 2026—3 expect a 25 basis point hike, 5 expect 50 basis points, and 1 expects a 75 basis point hike. The number of officials expecting rates to remain unchanged dropped to 8, and only 1 expects there’s still room for a rate cut this year.

A key factor was also the shift in communication style from the new Fed Chair, Kevin Warsh. Warsh did not submit a rate forecast—making him the only "dot" missing from the dot plot. The policy statement was slashed from about 340 words at the April meeting to just 130 words, with all prior language hinting at possible rate cuts this year removed. In the press conference, Warsh emphasized the Fed’s commitment to price stability, mentioning "inflation" 12 times and "labor market" only 5 times.

Bitcoin dropped sharply following the FOMC announcement, falling to about $64,264 on June 18, a 24-hour decline of roughly 1.78% to 1.95%. ETH fell about 3.6%, and SOL dropped around 3%.

This isn’t the first time Bitcoin has faced the shock of Fed rate hike expectations. In 2018 and 2022, Bitcoin went through two very different rate hike cycles. Looking back at these periods from the vantage point of June 2026 may help us better understand the current market landscape.

2018 Rate Hike Cycle: From Historic Highs to a Steep Fall

In 2018, under then-Chair Jerome Powell, the Fed raised rates four times, each by 25 basis points, lifting the federal funds rate from 1.25%-1.50% to 2.25%-2.50%.

This was the first time Bitcoin experienced a full Fed rate hike cycle. In December 2017, Bitcoin had just hit an all-time high of around $19,345. Market sentiment was euphoric, and sensitivity to macro liquidity was nowhere near today’s levels.

But the cumulative effect of rate hikes eventually took hold. As the Fed hiked rates four times in a row, the dollar strengthened and global liquidity tightened, Bitcoin began a sustained decline from early 2018. Over the year, it fell about 74%. If measured from peak to trough, the maximum drawdown reached about 80% to 84%.

The market’s reaction to individual FOMC decisions was also notable. After the March 2018 rate hike, Bitcoin dropped more than 10% in the following days. After the June 2018 hike, Bitcoin plunged about 20% in just four days. Following the final hike in December 2018, Bitcoin’s price bottomed out near $3,500.

A key feature of the 2018 rate hike cycle was that the "expectation gap" effect had not yet become a dominant force. At the time, crypto market pricing logic focused more on trend continuation—rate hikes meant tighter liquidity, which put pressure on risk assets, and Bitcoin followed this macro narrative lower. The market’s reaction to FOMC surprises was muted; the real pressure came from the cumulative impact of the rate hike cycle.

After the final hike in December 2018, the Fed paused. Before the first rate cut in July 2019, Bitcoin rallied from around $3,500 to about $12,000, a gain of roughly 161.7%. This stat has since been widely cited as empirical support for the trading logic that "the window between the last rate hike and the first rate cut is the best time to position in Bitcoin."

2022 Rate Hike Cycle: Volatility Driven by Expectation Gaps

If 2018 was Bitcoin’s first encounter with a rate hike cycle, 2022 was the first time Bitcoin—now with much deeper institutional involvement—faced a rate hike environment dominated by "expectation gaps."

In 2022, the Fed raised rates seven times. The cycle began with a 25 basis point hike in March, followed by a 50 basis point increase in May, and then four consecutive 75 basis point hikes in June, July, September, and November. December saw another 50 basis point hike. This was the most aggressive rate hike cycle since the 1980s.

Bitcoin fell about 65% over the course of 2022. From its all-time high of around $69,000 in November 2021, it dropped to a low of about $15,500 in November 2022, a maximum drawdown of nearly 78%.

Unlike 2018, Bitcoin’s reaction to individual FOMC decisions in 2022 was more complex. Despite several 75 basis point hikes mid-year, the pace of Bitcoin’s decline gradually slowed. After each 75 basis point hike, there were often brief "relief rallies" as the market digested the news.

For example: After the Fed announced a 50 basis point hike on May 5, 2022, Bitcoin dropped from around $34,000 to below $30,000 in the following days, a cumulative decline of over 15%. After the 75 basis point hike in June, Bitcoin fell about 18% within a week. Following the 50 basis point hike on December 15, Bitcoin dropped about 2.5% within an hour of the announcement, landing at $17,740.

This "rally then drop" or "jump and retrace" pattern reflected a shift in the market’s core pricing logic—from "rate hike = bearish" to "expectation gap = volatility." When the hike matched or was below expectations, the market would briefly rally; but as the cumulative tightening effect set in, the downtrend resumed.

After the last hike in December 2022, the Fed paused. Before the final rate hike in July 2023, Bitcoin gradually recovered from the $16,000 range to above $30,000.

Quantitative Comparison: Two Rate Hike Cycles

Placing the 2018 and 2022 rate hike cycles side by side reveals several key differences:

• Number and Pace of Hikes: 2018 saw four evenly paced 25 basis point hikes; 2022 had seven hikes, including four consecutive 75 basis point increases—an extremely aggressive pace.
• Annual Bitcoin Decline: Bitcoin fell about 74% in 2018 and 65% in 2022. The absolute decline was greater in 2018, but since the starting point in 2018 (around $20,000) was much lower than in 2022 (around $47,000), the actual market cap wiped out in 2022 far exceeded that of 2018.
• Single FOMC Reaction Patterns: 2018 was characterized by a sustained downtrend, with little "expectation gap" trading after each decision. In 2022, frequent "relief rallies" occurred, but the overall trend remained down.
• Market Structure: In 2018, crypto was still dominated by retail investors, with limited institutional participation. By 2022, institutional infrastructure (futures, options, ETF expectations, etc.) was well developed, making the market more sensitive and efficient in pricing macro data.
• Post-Bottom Rebound: Between the last hike and the first cut, Bitcoin surged about 161.7% in 2018–2019. In 2022–2023, it climbed from around $16,000 to $31,000, a 94% gain. Both periods saw significant positive returns, but the rebound was larger in 2018–2019 due to a lower starting base.

June 2026: Expectation Gaps at Their Peak

As of June 18, 2026, Bitcoin is trading at about $64,264, down roughly 33.74% from the same period in 2025 and off about 22.4% from its 90-day high of $82,828.

Today’s environment shares some similarities with 2018 and 2022, but there are also fundamental differences.

On the similarity side: The Fed is once again signaling a hawkish stance, with the dot plot shifting from rate cut expectations to rate hike expectations and the market repricing the rate path. In March, no one on the dot plot supported a hike and seven supported cuts; by June, nine supported hikes and only one supported a cut—a 180-degree reversal reminiscent of the abrupt shift in 2022 when market pricing for the hike jumped from 50 to 75 basis points.

But the differences are just as stark. Both the 2018 and 2022 cycles occurred at the "start" or "early" stage of the Fed’s shift from cutting to hiking rates—the market had to digest the shock of "first hike" and "accelerating hikes." In June 2026, however, rates are already in a "restrictive range" of 3.50%–3.75%. The market had broadly expected rate cuts this year, only to be told by the dot plot that "rate hikes are possible." This is not a shock from zero to one, but a reversal from "easing expectations" to "tightening expectations."

The most critical difference lies in the degree of the expectation gap. After the June 2026 FOMC, the probability of rates staying unchanged in December plummeted from 38.2% to 16.1%, while the probability of at least one hike by year-end soared to 83.9%. This means that in just a few hours, the market repriced "rate hikes" from a possibility to the base case. The speed and magnitude of this repricing is unprecedented in Bitcoin’s history.

Looking back at 2022, even in the most aggressive rate hike cycle, the market’s adjustment to the expected rate hike at the next meeting was gradual—moving from 50 to 75 basis points took weeks of data. In June 2026, the dot plot as an "institutional signal" abruptly reshaped the entire market’s view of the rate path in one go.

Another difference is Warsh’s communication style. Warsh has long questioned the effectiveness of the dot plot as a communication tool. In his first press conference, he mentioned "inflation" 12 times but referred to the "labor market" only 5 times. The policy statement was cut from 340 words to 130, and all forward guidance was removed. This means the market’s "anchor" for the Fed’s future rate path has been deliberately taken away. When the anchor is gone and the dot plot sends a strong hawkish signal, the market’s response is bound to be amplified, not dampened.

What does this mean for Bitcoin?

From 2022 to 2024, across 24 FOMC meetings, a consistent pattern emerged: FOMC meetings triggered position reshuffling in Bitcoin, rather than fundamentally changing its trend direction. Changes in the dot plot and the Fed Chair’s press conference had a greater impact on the market than the rate decision itself.

The June 2026 meeting reaffirmed this pattern—the hawkish dot plot shock far outweighed the "status quo" of unchanged rates. Bitcoin fell to about $64,264 after the decision, down roughly 1.78% to 1.95%, with ETH and SOL seeing even steeper declines.

Historically, Bitcoin’s performance during rate hike cycles has depended on three core variables: whether hikes were fully anticipated, the degree of cumulative tightening, and the market’s pricing of the future policy path.

Currently, the rate hike itself (or holding rates steady) has been fully priced in, but the sheer magnitude of the "83.9% probability of a hike by year-end" may not have been fully absorbed by Bitcoin’s price. An 83.9% probability means the market sees a hike as nearly a certainty—in futures market terms, it’s almost "baked in."

Some analysts argue that the current expansion of the US economy is being driven more by temporary factors such as World Cup-related jobs and inflation pulses, as well as one-off fiscal boosts. These are expected to fade after August–September, at which point rate hike expectations may be revised downward. In other words, the actual probability of a rate hike in 2026 may end up lower than the 83.9% priced in by the futures market.

But the key point is this: markets trade on expectations, not facts. As long as that 83.9% figure is on the FedWatch Tool, risk asset pricing will have to factor in "rate hikes are almost certain."

Conclusion

In 2018, Bitcoin lost 74% during the rate hike cycle; in 2022, it fell 65%. Both cycles brought significant bear markets, but the pattern of Bitcoin’s reaction to each FOMC meeting was very different—from steady downtrends to volatility driven by expectation gaps, reflecting greater market efficiency and deeper institutionalization.

In June 2026, under Kevin Warsh’s first meeting as Fed Chair, a 130-word statement and a dot plot showing nine officials favoring hikes delivered a hawkish bombshell to the market. CME FedWatch data showed the probability of rates staying unchanged in December plunged from 38.2% to 16.1%, while the probability of a hike soared to 83.9%. Bitcoin promptly fell below $65,000.

This is the first time in Bitcoin’s history that the market has faced an extreme expectation reversal—jumping directly from rate cut expectations to near-certainty of a rate hike. The experiences of 2018 and 2022 show that the impact of a rate hike cycle is cumulative, and the immediate reaction to a single FOMC decision is often less significant than the effect of the entire cycle. After the "last hike," whether in 2018 or 2022, Bitcoin saw a notable rebound.

But what makes 2026 unique is that the market has priced in an 83.9% probability of a hike before the first hike has even occurred. If the hike materializes, will Bitcoin face "sell the news" or "relief rally"? If the hike doesn’t happen (for example, if inflation data cools after August–September), how will Bitcoin digest the "83.9% expectation miss"?

The answers will depend on inflation data in the coming months, oil price trends, and how the Fed under Warsh communicates with the market in this new era of "no forward guidance." For Bitcoin, whether the $64,000 support holds may be a short-term question; the real issue is how the market will price an extreme path from "rate cut expectations" to "83.9% probability of a hike"—and to what extent this extreme pricing will replay the historical scripts of 2018 or 2022.