The Federal Reserve's 2023 interest rate hikes significantly impacted the cryptocurrency market. As the Fed raised rates to combat inflation, borrowing costs increased, reducing liquidity and investor appetite for risky assets like crypto. Bitcoin and Ethereum saw sharp declines, with prices stabilizing in early 2023 after a steep 2022 drop. Higher rates made traditional investments like bonds more attractive, diverting capital from cryptocurrencies. However, as rate hikes slowed mid-2023, crypto prices found support, with Bitcoin and Ethereum posting steady gains. Market sentiment shifted cautiously optimistic, anticipating potential rate cuts. While short-term volatility persisted, the crypto market's total capitalization grew, signaling resilience. Investors adapted to the Fed’s tightening, with some viewing crypto as a long-term hedge against inflation despite the challenging rate environment.