Summary
- Bitcoin is trading around $84,490, a decline from Monday’s peak of $87,397, as projections for an October rate hike by the Federal Reserve reach about 75% and December predictions stand near 59%.
- Among the top 10 cryptocurrencies, only BNB and Solana are experiencing gains over the past 24 hours, rising by 2.75% and 2.31% respectively, while other major coins like Ethereum and XRP are losing momentum.
- Recent crypto derivatives data reveals $348.33 million in liquidations, with $270.89 million from long positions and $77.43 million from shorts.
On Thursday, Bitcoin was priced at approximately $84,490, a drop from its $87,397 high on Monday, as traders adjust their expectations for a potential Federal Reserve rate increase next month.
This decline follows a significant rally that saw Bitcoin surge from the mid-$70,000s to an eight-month peak in under a week. Concerns over inflation have escalated the likelihood of an October rate hike to around 75%, with December's estimates at approximately 59%, according to the CME FedWatch tool.
Myriad: Will the Fed raise rates again? Click to make your prediction.Increased rates typically lead to higher borrowing costs throughout the economy, which strengthens the dollar and enhances returns on cash and government bonds. This scenario makes non-yielding and volatile assets like Bitcoin comparatively less appealing.
Higher interest rates can also tighten market liquidity and increase the costs associated with leveraged trading, factors that historically depress cryptocurrency prices during periods of monetary tightening.
Image: CNBCWednesday marked the Federal Reserve's first interest rate hike since July 2023, when it raised the benchmark range to 5.25%-5.5% before entering a cutting cycle the following year. The increase approved unanimously on September 16 adjusted the target range to 3.75%-4%.
Fed Chair Kevin Warsh coupled the hike with a dot plot indicating a median rate of just 4.1% through the end of 2027, which traders interpreted as suggesting only one more rate adjustment rather than an ongoing tightening trend.
This dovish outlook led to a drop in rate-hike expectations in the days following the meeting, with markets initially perceiving September’s increase as a one-time event. However, the calm was short-lived.
The odds of an additional hike by year’s end, potentially as soon as October, have surged to 68.5% on Myriad Markets, while CME's FedWatch tool now estimates a 75% chance of a 25-basis-point increase in October, a significant rise from earlier predictions.
Fed Governor Michael Barr indicated on Wednesday that further policy adjustments may be necessary to achieve inflation targets, coinciding with an S&P Global report revealing inflation at its highest in nearly four years.
Core PCE, the Fed's favored inflation measure, stands at 3.4%, significantly above the 2% target, providing a strong rationale for tightening policies potentially as early as the October 27-28 meeting.
Market Cooling Off
Most leading cryptocurrencies are also experiencing a slowdown alongside Bitcoin. Ethereum has risen only 1.42% in the last 24 hours to about $2,689, XRP remains flat at $1.52, and Zcash has decreased by 2.5% to $1,527.57, despite a remarkable annual increase of over 2,700%.
Meanwhile, Hyperliquid has dipped by 0.37% to $93.04 as traders take profits from its recent surge.
BNB and Solana stand out as exceptions. BNB has increased by 2.75% to $781.33, continuing its upward trajectory after surpassing $790 earlier this week, marking an 11% weekly gain following Binance's $100 million acquisition of Circle shares, which ties it to five years of USDC growth. Solana saw a 2.31% rise to $116.08, building on a recent ascent to a nine-month high above $117 last week.
Both cryptocurrencies are also attracting new institutional interest that Bitcoin and Ethereum are currently lacking.
Grayscale's Smart Contract Fund recently allocated a 30.6% weighting to BNB in its latest rebalance, surpassing Ethereum’s 29.47% and Solana’s 29.15%, making BNB the fund's largest holding. Solana, on the other hand, received a boost after ZetaChain token holders overwhelmingly voted 99.4% in favor of migrating the project’s token and AI application to the Solana network.
Despite the recent downturn, the broader market context remains optimistic.
Spot Bitcoin ETFs recorded $998.9 million in inflows on Monday alone, marking their largest single-day intake in 11 months, and net flows for 2026 have turned positive for the first time this year, approximating $320 million.
Liquidation data indicates that $348.33 million in crypto positions were liquidated in the last 24 hours, with $270.89 million stemming from long positions following last week’s short squeeze that left leveraged bulls vulnerable to price declines, compared to $77.43 million from shorts.
The overall cryptocurrency market capitalization is currently at $2.93 trillion, reflecting a roughly 2.5% decrease from the $3 trillion mark reached during last week’s rally.
The Crypto Fear and Greed Index is at 73, indicating a state of "greed" despite the recent cooling, while the Altcoin Season Index stands at 51, suggesting a balance between a Bitcoin-led market and one where altcoins are outperforming.
The next critical moment is expected on October 28, when the Fed's rate decision will reveal whether this week's pause was merely a temporary setback or the beginning of a more extended decline.