How the Fed’s Upcoming Decisions Could Shape Bitcoin’s Price Trajectory
Bitcoin has recently reclaimed the $111,000 mark, rebounding after slipping below this level over the weekend. This rally coincided with a notable development in global trade relations: the United States and China appear poised to ease tensions surrounding tariffs on rare earth minerals. These diplomatic signals sparked a surge in risk-on sentiment across the financial markets. As a result, not only did Bitcoin gain momentum, but S&P Futures also climbed, and gold extended its rally beyond $4,200.
Despite this renewed optimism, cryptocurrency traders remain cautious as they await the U.S. Federal Reserve’s next policy move. Scheduled for October 29, the upcoming Fed meeting is widely expected to result in a 25-basis point interest rate cut, with market expectations currently pricing in a 98% probability of such an action.
Historically, lower interest rates—by reducing the cost of borrowing—have supported bullish trends in risk assets, including Bitcoin. The availability of cheaper capital tends to fuel investor appetite for high-volatility, high-reward assets. However, this time the Fed is navigating unusually murky waters. Key economic data releases have been delayed due to the recent government shutdown, leaving policymakers without critical information ahead of their decision.
Even so, market participants are optimistic that macroeconomic conditions are turning more favorable. Some analysts believe that the Fed’s eventual pivot to a more dovish stance could ignite a broader Q4 rally in digital assets. Joshua Deuk, the Head of Trading at Mozaik Capital, remains positive about the medium-term outlook. He notes that unless a major geopolitical shock emerges, such as a drastic escalation in U.S.-China tensions, the bias for Bitcoin in the coming months remains upward.
From a technical standpoint, support and resistance levels are clearly defined in traders’ minds. Gracy Chen, CEO of Bitget, emphasized that recent price volatility—particularly a sudden flash crash—has undermined short-term market confidence. That said, she views $100,000 as a critical support zone, aligning with the 360-day moving average. If Bitcoin maintains this level and eventually breaks above its previous all-time high, Chen believes the asset could still trend higher into the first quarter of next year.
However, failure to hold above key levels such as $110,000 or $100,000 could trigger profit-taking or deeper market corrections. According to Chen, if BTC breaks below these thresholds, technical indicators might prompt her to cut exposure.
Meanwhile, the Options market is offering its own insights into trader sentiment. Amberdata’s 25 Delta Risk Reversal (25RR) — a metric that captures the relative demand for call and put options — was negative for expiries in the upcoming week. This trend suggests increased hedging activity and a prevailing bearish bias among derivatives traders. Nevertheless, many Options participants are eyeing $100,000 as a solid price floor, with $120,000 emerging as a potential upside target for the remainder of Q4.
As macroeconomic and geopolitical factors continue to evolve, Bitcoin’s price is likely to remain sensitive to both Federal Reserve policy and global trade dynamics. Here are several additional factors that could influence BTC’s performance in the near term:
1. Liquidity Conditions in Global Markets
Central bank policies across the globe, not just from the Fed, play a vital role in shaping crypto market dynamics. Coordinated easing or tightening measures from institutions such as the European Central Bank or the Bank of Japan could enhance or dampen the global risk appetite.
2. Institutional Inflows and ETF Developments
The pace at which institutional capital flows into Bitcoin—particularly through regulated investment vehicles like ETFs—can significantly affect price action. A favorable regulatory ruling or approval of a spot Bitcoin ETF could trigger substantial buying pressure.
3. On-Chain Metrics and Whale Activity
Monitoring blockchain data can offer clues about market positioning. A spike in wallet activity among so-called “whales” or long-term holders accumulating BTC could signal growing confidence in further upside.
4. Correlation with S&P 500 and Risk Assets
Bitcoin’s close correlation with traditional risk assets means any sudden moves in the stock market—whether due to earnings reports, economic data, or geopolitical stress—can quickly reflect in BTC price fluctuations.
5. Sentiment Indicators and Fear-Greed Index
Investor psychology remains a critical component of crypto markets. Tools like the Crypto Fear & Greed Index can help gauge prevailing sentiment. Prolonged periods of extreme fear or greed often precede significant market reversals.
6. Regulatory Landscape
Any unexpected regulatory actions, whether in the U.S., Europe, or Asia, can lead to sharp market reactions. Clarity on taxation, custody, or crypto exchange operations could either support or stifle market growth.
7. U.S. Dollar Strength
The inverse relationship between Bitcoin and the U.S. Dollar Index (DXY) is well-documented. A weakening dollar—often a result of interest rate cuts—tends to support BTC’s upward movement as investors seek alternative stores of value.
8. Mining Economics and Halving Expectations
With the next Bitcoin halving event on the horizon, mining difficulty and profitability metrics are increasingly under scrutiny. Reduced block rewards typically lead to supply shocks, which historically have preceded strong price rallies.
In conclusion, while Bitcoin has demonstrated resilience by reclaiming the $111,000 level, its path forward remains intertwined with broader macroeconomic developments. The upcoming Fed decision, coupled with geopolitical shifts and internal market dynamics, will be critical in determining whether BTC can sustain its bullish momentum or face renewed headwinds. Traders and investors alike are advised to stay informed and adaptive in this complex and rapidly evolving landscape.