Bitcoin Struggles After Federal Reserve Rate Cut and Powell’s Cautious Remarks
The Fed Cuts, But Remains Cautious
The Federal Reserve delivered a double blow to the market: a 0.25% rate cut as expected, followed by a much more cautious speech by Jerome Powell. In essence, another “rate cut” in December? Nothing is guaranteed. As a result, the crypto market abruptly reversed, causing over $820 million in liquidations in 24 hours.
Bitcoin dropped by nearly 5% in 24 hours to around $107,500, far from its recent all-time high, while the rest of the market followed suit in the red. Investors, already rattled by the October 10 “flash crash,” are once again retreating to cash. Orders are scarce, liquidity is thinning, and major crypto treasuries are selling at a loss to survive.
Options, Volatility, and Hedging: Watch Out for the End of the Week
Another threat looms over the market: the $13 billion Bitcoin options expiry on Friday. Between strike prices at $100,000 and $111,000, market makers are in “negative gamma,” which could amplify every move. In short, the more Bitcoin moves, the more their hedges will increase volatility.
Deribit’s data confirms the tension: traders are still paying a premium for short-term calls, indicating a bullish bias in the market, but without strong conviction. The put/call ratio favors calls (55/44), but implied volatility is subsiding. The battle for $110,000 is set to be explosive.
Resilient Yet Fragile Market
Despite the storm, Bitcoin’s technical signals remain strong: the key support at $107,000 is holding for now. Below that, the next critical zone is around $99,000.
Spot Bitcoin ETFs still see $470 million in net outflows, indicating institutional profit-taking. However, open interest in BTC futures has risen to $27.2 billion, a sign of a quick return of opportunistic buyers.
Fall promises volatility: between the Fed’s caution, the end of “QT,” and massive options expiries, the crypto market could experience a few more tremors before the next wave of euphoria.
