The anticipation of Federal Reserve interest rate hikes often increases volatility in Bitcoin markets. Higher interest rates can strengthen the US dollar and increase borrowing costs, leading investors to reduce exposure to risk assets like BTC. This typically results in short-term sell-offs or price corrections. Conversely, if rate hikes are less aggressive than expected, BTC may rally due to renewed risk appetite. Market participants closely watch Fed communications and economic data, causing BTC price swings around key announcements. The uncertainty around monetary policy contributes to heightened short-term volatility as traders react quickly to shifts in inflation and rate expectations.