Bitcoin Slides as Fed Meets – 98% of Traders Bet on Rate Cut Fueling Crypto Rally

Fed Pivot Expected: The U.S. Federal Reserve is widely anticipated to cut interest rates by 0.25% at the conclusion of its policy meeting on Oct. 29. Futures and prediction markets put the odds of a rate reduction at about 97–98% ^[1], signaling near-unanimous bets on a Fed pivot toward easier policy. This would mark the second rate cut of 2025, following a similar quarter-point cut in September.
Crypto Dips Ahead:Bitcoin (BTC) and Ether (ETH) prices slipped slightly as the Fed’s meeting kicked off. Bitcoin traded around $114,850 on Tuesday, while Ethereum hovered just above $4,100, both down on the day after a strong weekend rally ^[2]. The broader crypto market saw mild declines in tandem – for example, Ether fell ~2.6% and other majors like Solana also dipped a few percent ^[3] – reflecting cautious positioning ahead of the Fed decision. Despite the pullback, Bitcoin was still up about 5–6% over the past week, thanks to earlier “Uptober” gains.
Bets Fully Priced In:Wealthy traders and analysts have effectively priced in the rate cut. Market data show an almost fully baked-in 0.25% cut ahead of Wednesday’s FOMC announcement ^[4]. In fact, major brokerages and Fed futures alike foresee quarter-point cuts at both the October and December Fed meetings ^[5] ^[6]. With a cut seen as a foregone conclusion, investors are now focused on Fed Chair Jerome Powell’s tone and any hints on future policy – such as whether the Fed will halt its quantitative tightening (bond portfolio runoff) to support liquidity ^[7]. Traders broadly believe the move is “largely priced in,” meaning any market reaction may hinge on surprises in the Fed’s guidance ^[8].
Analysts Eye Crypto Upside: Many crypto watchers see a dovish Fed outcome as a bullish catalyst. Michaël van de Poppe (aka CryptoMichNL) noted that Bitcoin’s recent dip and quick rebound are “typical pre-FOMC” price action, suggesting BTC “may be bottoming” ahead of the Fed decision, with an uptrend likely in the days following ^[9]. Similarly, market strategists point out that easier monetary policy historically supports crypto and other risk assets. If the Fed indeed begins an easing cycle, ample liquidity and lower yields could drive more investment into Bitcoin and Ethereum as attractive alternatives ^[10].
Policy Impact & Outlook: Experts say a Fed rate cut – coupled with a potential end to tightening – could provide a tailwind for Bitcoin going into 2026. Winding down quantitative tightening (QT) would increase dollar liquidity in markets, which analysts call a positive for Bitcoin as a scarce asset hedge in a lower-rate environment ^[11]. However, not everyone is in risk-on mode: some long-term crypto holders have been taking profits after the recent rally, and any hawkish surprise from the Fed (for instance, signaling a pause on further cuts) could spark short-term volatility ^[12]. In other words, all eyes are on the Fed’s next move, as it may determine whether Bitcoin’s autumn rally resumes or faces a deeper correction.

Fed Meeting Looms with Near-Certain Rate Cut

All signs point to the Federal Reserve lowering interest rates by 0.25% at this week’s meeting, which concludes Wednesday, Oct. 29. According to the CME FedWatch tool and other market indicators, there is roughly a 97–98% probability of a quarter-point cut ^[13]. This would set the federal funds rate around 4.0%–4.25%, down from the current 4.25%–4.50% range, and would be the Fed’s second cut this year (after a similar cut in September) ^[14]. Major Wall Street firms are overwhelmingly aligned with this expectation: in fact, most top brokerages predict a 25 bps cut at each of the Fed’s two remaining meetings of 2025 ^[15]. Only a minority (like Bank of America) thinks the Fed might cut just once more this year ^[16].

Why the sudden dovish turn? In 2022 and early 2025, the Fed was raising rates aggressively to fight inflation. But by this fall, inflation has cooled considerably – the latest CPI reading came in around 3.0% year-on-year, slightly softer than expected ^[17] and much closer to the Fed’s 2% target. Economic growth is moderating, and there are emerging signs of labor market softening. The Fed’s quarter-point cut in September was its first rate reduction in years, effectively ending the hiking cycle. Now, with inflation trends improving and some concerns over economic momentum, the Fed appears ready to pivot to easing. “The Federal Reserve is widely expected to cut its policy rate by 25 basis points to 4% on Wednesday,” CoinDesk noted, adding that futures imply near certainty of another cut in December as well ^[18]. The consensus on Wall Street is that more rate cuts will follow in 2024, creating a dramatically different backdrop from the tightening phase of the past two years ^[19].

At this point, traders have virtually fully priced in this week’s cut – meaning it would be a shock if the Fed didn’t ease. The real question is what signals Jerome Powell sends about the future path. Markets will parse Powell’s post-meeting press conference for clues on further rate cuts in early 2026 and on the Fed’s massive bond portfolio. Notably, Powell recently hinted the Fed may be nearing the point to stop shrinking its balance sheet: “We may approach that point in coming months,” he said regarding ending quantitative tightening (QT), i.e. the runoff of Fed-held bonds ^[20]. An end to QT – which has been draining liquidity from the financial system – would be taken as another form of easing. While halting QT is not the same as outright QE, it would signal that the Fed is done actively tightening financial conditions. Analysts from Bank of America and JPMorgan are among those suggesting the Fed could announce or strongly hint at a wind-down of QT soon, which they view as a bullish development for markets ^[21].

In short, the stage is set for a pivotal Fed decision. Barring an extreme surprise, the central bank will deliver the expected cut. Traders are then bracing for Powell’s guidance: will he emphasize caution, or open the door to more aggressive easing ahead? With the U.S. government recently in a partial shutdown that delayed some economic data releases, the Fed has been operating with less fresh data than usual ^[22]. This has prompted some observers to say the Fed is heading into this meeting “in a fog” – making forward guidance even more crucial. If Powell strikes a balanced tone – acknowledging improved inflation but retaining a “data-dependent” stance – it could reassure investors. On the other hand, any indication that the Fed might pause on further cuts (or concern about still-high oil prices, for example) could surprise a market that’s leaning very dovish.

Bitcoin and Ether Slip as Traders “Sell the News” Pre-FOMC

In the lead-up to the Fed decision, cryptocurrency markets have been jittery. After a robust rally in mid-October, crypto prices are now pulling back modestly ahead of the event. Bitcoin had surged from around $105,000 to nearly $116,000 over the past week, fueled by optimism around the Fed and even hopeful news of a U.S.–China trade deal ^[23] ^[24]. That burst of “risk-on” enthusiasm — which also lifted equities — saw Bitcoin briefly revisit levels close to its all-time high (~$125K earlier in the month). However, as the Fed’s meeting began on Oct. 28, Bitcoin gave up some of those gains, retreating to the mid-$114K range ^[25]. Similarly, Ether (Ethereum’s token) which had climbed above $4,200, fell back to roughly $4,100 on Tuesday ^[26]. CoinDesk reported that on Monday Bitcoin was hovering around $114K while Ether slipped ~2.6% to about $4,115 ^[27], and other top altcoins like Solana and Binance Coin were down 2% or more.

This kind of dip is a classic case of “buy the rumor, sell the news” behavior. Traders bid up crypto (and stocks) in anticipation of a favorable Fed outcome, then take some risk off the table as the event nears to lock in profits or hedge bets. “Bitcoin hovered around $114,000… as traders positioned cautiously ahead of a Federal Reserve meeting expected to deliver the second rate cut of the year,” CoinDesk noted ^[28]. In other words, there’s a bit of short-term caution setting in. Crypto markets, known for their volatility, often see minor pullbacks before major macro events like Fed decisions, as traders trim leveraged positions just in case something unexpected happens.

It’s worth noting that the recent dip in crypto is relatively small compared to the big moves earlier in the month. In fact, Bitcoin is still about 5–6% higher than a week ago ^[29], and Ether is up week-over-week as well, despite the day-to-day fluctuations ^[30]. Much of the panic from mid-October’s slump (when a surprise geopolitical event sparked a $19 billion liquidation cascade) has subsided. “The crypto market has positively shaken off its fears,” said Alex Kuptsikevich, chief market analyst at FxPro ^[31]. He pointed out that Bitcoin’s bounce back above $116K earlier this week, and its ability to hold near the 200-day moving average, are encouraging signs. According to Kuptsikevich, the $117K–$120K zone remains strong resistance, but a “sustained breakout could renew highs” for Bitcoin ^[32] – suggesting a potential run to new records if the Fed’s news sparks enough momentum.

In the immediate term, trading volumes and leverage are something to watch. Analysts observed a spike in Bitcoin futures open interest from about $25 billion to nearly $30 billion as prices ran up ^[33]. That indicates fresh leveraged money entered the market – a double-edged sword. As Lacie Zhang, a research analyst at Bitget, explained: rising open interest can “amplify upside momentum” if prices break higher, but it also “heighten[s] liquidation risks” if the market swings downward unexpectedly ^[34]. In simpler terms, more leverage means a bigger rocket fuel if Bitcoin jumps, but also more risk of a sharp fall if many traders are forced to unwind positions. For now, data from Coinglass show funding rates are stable and not overly euphoric, suggesting traders haven’t gotten recklessly bullish just yet ^[35]. Still, with Fed day on the horizon, volatility could return in a flash depending on what Powell says.

Traders Bet Big on a Fed Pivot – “Cut is Already Priced In”

From crypto whales to Wall Street, confidence is extremely high that the Fed will cut rates – and that has been a key factor in market sentiment. Prediction markets and Fed futures are essentially signaling 100% certainty of a 25 bps cut this week ^[36]. One crypto-centric prediction platform reportedly shows wealthy traders assigning a 98% probability to a quarter-point rate cut at this meeting (and many are betting real money on it). The CME FedWatch Tool similarly shows virtually no one expecting the Fed to stand pat. “Markets expect a 25-basis-point Fed rate cut, with a ~97.8% probability,” one market update noted on Oct. 28 ^[37]. In short, a Fed pivot to easing is the overwhelmingly consensus view.

Because of this, traders say the rate cut is ‘largely priced in’ to asset prices already ^[38]. Bitcoin’s surge back above $110K in recent weeks, along with the stock market’s rebound, has reflected the anticipation of easier Fed policy. Low inflation readings have only strengthened this outlook: the slight downside surprise in CPI (3.0% vs 3.1% expected) in late October bolstered the conviction that the Fed can afford to ease up ^[39]. As a result, investors across the board have been positioning for a more dovish Fed stance. One tangible example: in the crypto world, a mysterious trader moved over $50 million into long positions on Bitcoin and Ether on a high-leverage exchange days before the meeting – effectively a giant bet that prices will rise on a Fed cut, according to reports circulating on X (Twitter). Such bold wagers underscore the prevailing sentiment that the Fed will not surprise hawkishly.

With the actual decision almost a foregone conclusion, the focus shifts to the Fed’s communication. Traders will dissect Powell’s words for any hint of how fast and how far the Fed might cut rates going forward. Will this be a “one (and done for now)” cut, or the start of a series? The Fed’s updated statement and Powell’s Q&A will likely address the economic outlook: growth, jobs, and inflation. If Powell emphasizes that inflation is back under control and that the Fed is now more worried about economic slowdown and employment, markets could interpret that as a green light for further easing. Indeed, Powell is expected to reiterate that the Fed is watching for labor market softness as a key risk, especially after an autumn uptick in unemployment claims ^[40]. Already in September, he indicated rising concern about downside risks to jobs, even calling a recent inflation flare-up from tariffs “transitory” ^[41]. That kind of dovish talk would likely “bolster hopes for additional easing over the coming months”, potentially adding fuel to risk assets like stocks and crypto ^[42].

Another critical element is the Fed’s $8 trillion balance sheet. As mentioned, any signal about ending QT could be market-moving. The Fed has been reducing its bond holdings (treasuries and mortgage securities) gradually, but reserves in the banking system have now fallen near levels that the Fed considers the minimum “ample” level ^[43]. Powell’s recent comments suggest the Fed might pause the runoff soon. Stopping QT would mean the Fed stops draining liquidity – which, while not the same as cutting rates, would be addition by subtraction for markets (removing a source of tightening). Crypto investors, in particular, pay close attention to liquidity conditions. When money is cheaper and more abundant, it often finds its way into speculative assets. “Analysts say ending quantitative tightening could be a tailwind for Bitcoin as inflation tolerance rises,” reported TechStock² (TS2), noting that big banks like JPMorgan also see a potential end of QT on the horizon ^[44]. In practical terms, if the Fed stops shrinking its balance sheet, it could alleviate some upward pressure on interest rates and support higher asset prices. This is one reason crypto traders have been so eager for a Fed pivot – not just the rate cut itself, but the knock-on effects on liquidity and the dollar. Historically, Bitcoin tends to perform well when real interest rates are falling or the dollar is weakening ^[45], as investors seek hedges and higher-yielding alternatives.

All told, the betting markets are aligned: they foresee a dovish outcome. The risk, of course, is if everyone is on one side of the boat, even a small surprise can rock it. Should Powell, for instance, downplay the likelihood of additional cuts or express more concern about inflation staying above 2%, traders might have to recalibrate their expectations fast. But absent such surprises, the general mood is one of relief that the Fed is easing off the brakes. “Optimism has returned to the market as growing expectations of another US interest rate cut helped lift Bitcoin back to the $115,000 level,” wrote CryptoTimes24 analysts ^[46]. In the big picture, the Fed shifting from rate hikes to rate cuts is a significant macroeconomic shift – one that many crypto enthusiasts believe could mark the beginning of a more sustained bull market.

Crypto Market Outlook: Cautious Optimism if Fed Delivers

Looking beyond the knee-jerk reaction to the Fed announcement, what’s the outlook for crypto? Many analysts are cautiously optimistic that a confirmed Fed rate cut will extend the positive momentum in Bitcoin, Ether, and other digital assets. The rationale is straightforward: lower interest rates make riskier investments more attractive, by reducing yields on safe assets (like bonds) and weakening the dollar. “According to several leading market analysts, the Federal Reserve is likely to move forward with additional rate reductions – a policy shift that typically makes borrowing cheaper and boosts investor appetite for risk-on assets such as cryptocurrencies,” one market brief explained ^[47]. In other words, a dovish Fed = a green light for investors to take on more risk, which usually benefits crypto prices.

Michaël van de Poppe, a prominent crypto trader, even went so far as to call a bottom for Bitcoin the day before the Fed meeting. He observed that BTC’s ability to hold above ~$110K during last week’s volatility, and its quick rebound to $114K+, is “typical pre-FOMC” behavior ^[48]. In van de Poppe’s view, Bitcoin is “bottoming today” (Oct. 28) and primed for an uptrend later this week ^[49] – implying that once the Fed is out of the way, buyers could step back in. He’s not alone in predicting upside. As noted, FxPro’s Kuptsikevich sees a real shot at Bitcoin breaking out past $120K if the rally resumes ^[50]. Other analysts have pointed to macro tailwinds: a potential Trump-Xi trade truce (which has been rumored and helped markets earlier in the week ^[51]), as well as the possibility of more institutional money flowing into crypto through ETFs and funds. “Bitcoin’s recovery underscores renewed institutional inflows and long-term conviction,” said Bitget’s Lacie Zhang after the weekend rally ^[52], highlighting that large investors were using the dip earlier in October to accumulate. If the Fed confirms a friendlier monetary stance, that conviction among big players could strengthen, leading to more capital allocation into crypto assets.

Importantly, the mood in traditional markets also feeds into crypto. Lacie Zhang noted that Powell striking the right balance – easing without stoking fear – has been “stabilizing Treasury demand and lifting sentiment across equities and crypto” ^[53]. Indeed, U.S. stock indices have been rebounding in late October on the same hopes of a Fed pivot. The tech-heavy Nasdaq and S&P 500 notched gains in recent days, and even some beaten-down sectors rallied as investors anticipated easier financial conditions. Crypto, often seen as at the far end of the risk spectrum, benefits when stocks are buoyant and volatility is low. If the Fed delivers what the market wants (a cut and no negative surprises), it could prolong the year-end rally in both stocks and crypto. There’s also the psychological factor: a Fed rate cut would be the first during the current U.S. administration and would signal that the era of rate hikes (which was a headwind for crypto in 2022) is firmly over. That narrative shift – from tightening to easing – is something crypto bulls have awaited for a long time.

However, seasoned traders are also warning that volatility is not gone for good. Bitcoin’s path upward is rarely smooth, even in bull runs. One concern is the high leverage that’s been building up. As mentioned, open interest in crypto futures has climbed, meaning a lot of traders are using debt to bet on crypto prices. If everyone is leaning long (expecting prices to rise) and something triggers a drop, it can cause a cascade of liquidations (forced selling), which exacerbates the fall. We saw a taste of that on October 10, when an unrelated macro shock (a sudden tariff announcement) caused Bitcoin to plunge from ~$120K to $104K in hours and wipe out billions in positions ^[54]. While the market recovered, it was a reminder that downside risks remain. At present, on-chain data show some long-term Bitcoin holders have been moving coins out of cold storage, possibly to take profits or improve liquidity ^[55]. When old coins (dormant for 5+ years) start to move, it often precedes increased selling pressure, as those are early investors potentially cashing out. This doesn’t mean a crash is imminent, but it suggests not all investors are betting on uninterrupted upside.

Analysts therefore advise a bit of prudence around the Fed event. If Powell’s commentary is more hawkish than expected – for example, if he stresses that this cut might be the last for a while, or expresses concern about any recent uptick in prices – markets could react negatively in the short term. “If the Fed delivers a hawkish surprise… risk assets could see another pullback, and Bitcoin, being relatively high-beta, might correct sharply,” one TS2 crypto analysis cautioned ^[56]. Basically, a scenario where the Fed disappoints the doves could temporarily jolt crypto downward, perhaps retesting support levels (observers cite ~$110K and $105K as key support zones for BTC in such a case). On the flip side, a more dovish-than-expected Fed – say, if Powell hints at ending QT immediately or opens the door to larger cuts – could ignite an even stronger rally. In that case, Bitcoin might swiftly push past the $117K–$120K resistance area that has capped it recently ^[57]. Some traders even mention the possibility of new all-time highs for Bitcoin before year-end if multiple positive catalysts align (Fed easing, positive ETF news, etc.).

For now, the prevailing sentiment is one of “cautious optimism.” The crypto market appears to be in a holding pattern, waiting for the Fed’s cue. “With Fed week underway and risk appetite creeping back, markets appear to be shifting from fear to patience,” CoinDesk noted ^[58]. Patience is key here – once Powell speaks, the next big move for Bitcoin and Ethereum will likely reveal itself. Whether that’s a surge to new heights or a temporary tumble, traders are primed to react. One thing is certain: the Fed’s decision will reverberate well beyond the halls of the central bank, rippling through the crypto realm. After months of speculation, it’s show time – and crypto investors are hoping the final act of “Uptober” delivers a treat, not a trick.

Sources:

CNBC Crypto World – “Bitcoin and ether fall as Federal Reserve’s October meeting kicks off” (Oct 28, 2025) ^[59] ^[60]
TheStreet/Bitcoin Magazine – “Wealthy traders are betting 98% on a 25 bps Fed rate cut” (Oct 28, 2025) ^[61] ^[62]
Blockchain.News – “Bitcoin Holds Breakout with Pre-FOMC Retest: CryptoMichNL Calls Bottom” (Oct 28, 2025) ^[63]
TechStock² (TS2) – “Bitcoin Back Above $114K…Fed Rate Cut Expectations Keep Crypto Traders Eyeing BTC & ETH” (Oct 28, 2025) ^[64] ^[65]
Reuters – “Top brokerages eye consecutive Fed rate cuts for the rest of 2025” (Oct 28, 2025) ^[66] ^[67]
CoinDesk – “Bitcoin Slips Ahead of Fed Week…Traders Price in Rate Cut” (Oct 28, 2025) ^[68] ^[69]
CoinDesk – “Bitcoin Bid… Fed Rate Cut Looms; …Trump-Xi Summit Eyed” (Oct 26, 2025) ^[70] ^[71]
CryptoTimes24/OpenPR – “Bitcoin Reclaims $115K as Traders Bet on US Rate Cuts” (Oct 27, 2025) ^[72] ^[73]

Bitcoin and ether fall as Federal Reserve’s October meeting kicks off: CNBC Crypto World

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