$Bitcoin(BTC.CC)$ and $Ethereum(ETH.CC)$ traded higher at press time on Wednesday evening as the global cryptocurrency market cap rose 4% to $974.2 billion.

Why It Matters: Cryptocurrencies were relatively subdued compared with other risk assets on a day the U.S. Federal Reserve made the sharpest interest rate hike in 28 years.

The Fed raised the target Fed funds rate by 0.75% to between 1.5% and 1.75% on Wednesday, noting that inflation remained elevated.

The U.S. central bank released new "dot plot" economic forecasts, according to which, all 18 of its members are projecting interest rates will touch 3% by end of 2022.

The $S&P 500 index(.SPX.US)$ and $Nasdaq Composite Index(.IXIC.US)$ closed 1.5% and 2.5% higher, respectively, on Wednesday. At press time, S&P 500 and Nasdaq futures rose 0.7% and 0.8%.

The U.S. central bank has signaled more rate hikes are on their way but rate cuts arrive in 2024, said Edward Moya, a senior market analyst at OANDA.

The dot plots show they expect another 175 basis points of tightening for the rest of the year with a couple more hikes in 2023, before rate cuts are warranted in 2024." 

- wrote Moya, in a note seen by Benzinga.

Moya's colleague Craig Erlam said Bitcoin's trading environment has experienced a change and its $20,000 support level appears "very unstable."

"Risk appetite has been obliterated and the days of ultra-low rates are behind us. There isn't the same speculative mood that existed when bitcoin was exploding higher"

There may still be a belief that Bitcoin can thrive in the future but something that offers little now beyond speculative rallies is going to continue to struggle."

- Erlam said.

Bitcoin has declined nearly 25% in the last seven days and the volatility has attracted the attention of traders, according to Santiment.

The market intelligence platform said the 4.5-year high in Bitcoin's daily token circulation metric was an indication of trader polarization. Santiment said 497,000 unique BTC were moved at the beginning of the week, the highest since Dec. 6, 2017.

Alternative.me's "Crypto Fear & Greed Index" flashed "Extreme Fear" with a value of 7 at press time. A value of 0 on the index means "Extreme Fear" and 100 represents "Extreme Greed." The index now reflects the lowest values over a period of one year.

Despite the entrenched bearishness, cryptocurrency trader Michaël van de Poppe says he is "long" on Bitcoin, Ethereum, Avalanche (AVX), Fantom (FTM) and Polygon (MATIC). 

Fellow trader, Justin Bennett tweeted that if Ethereum reclaims the $1,230 level by 8 p.m. EST, we could see relief back to $1,420 and potentially to $1,700. At around 9 p.m. EST, the second-largest coin traded at $1,230.09.