Fed rate hike of 75 basis points could be optimistic for bitcoins and altcoins

This week the U.S. Federal Reserve is likely to raise interest rates. Traders expect the 75 basis points hike to cause a rally in the cryptocurrency market.

The S&P 500 and Nasdaq Composite indices posted their worst weekly results since June. This was due to investor concerns about the Federal Reserve's continued tight monetary policy to fight inflation, which could lead to a U.S. recession.

The correlation between bitcoin and the S&P 500 Index remains high. Bitcoin could decrease for more than 9% this week. If the current correlation continues, there is a high probability of even more losses in the cryptocurrency markets. Sharon Bell, Goldman Sachs strategist, warned that a rapid rate hike could trigger a 26% drop in the S&P 500.

The Fed is expected to raise rates by 75 basis points at its next meeting on September 20-21. FedWatch, on the other hand, shows an 18% chance of a 100-basis-point rate hike. Such ambiguity could keep traders strung-up, which would cause increased short-term volatility.