The Federal Reserve held rates steady at 3.5-3.75% last week, and markets threw a tantrum anyway. Bitcoin dropped roughly 2.8-3% to the $63,000-$64,000 range, the S&P 500 shed more than 1%, and dollar call options surged as traders priced in the possibility of rate hikes that haven’t actually happened yet.
Now a faction of options traders is stepping in with a contrarian bet: the selloff went too far.
What the Fed actually said
The June 17-18 FOMC meeting, the first under newly appointed Chair Kevin Warsh, didn’t feature a rate change. The committee kept the federal funds rate parked at 3.5-3.75%. What spooked markets was the dot plot, the Fed’s anonymous survey of where individual members expect rates to land.
Nine of the eighteen committee members projected at least one rate increase before the end of 2026. The median year-end estimate ticked up to 3.8%, signaling that the Fed sees rates moving higher rather than lower from here.
