Bitcoin News Today: Bitcoin Eyes 1999-Style Melt-Up as Fed Rate Cut Looms

Bitcoin's price briefly dipped below $120,000 amid expectations of a U.S. Federal Reserve rate cut later this month, as markets priced in a near-certain 25-basis-point reduction to 3.75%-4.00% Coindesk^[1]. The move followed a late-week pullback from $123,000 to $120,000, with Bitcoin subsequently stabilizing around $121,400 Coindesk^[1]. Analysts attributed the volatility to anticipation of the Fed's policy shift, with implied volatilities across 14-, 30-, and 90-day expiries surging to 30-day highs Coindesk^[1]. Polymarket data showed a 91% probability of the rate cut at the October 28-29 meeting, despite delays in key economic data from the government shutdown Coindesk^[1].

Historically, Bitcoin has shown mixed responses to Fed rate cuts. In 2019, three rate reductions spurred modest gains, while the 2020 emergency cuts during the pandemic initially triggered a crash before a subsequent rally to $28,000 by year-end Forbes^[3]. A weaker U.S. dollar and increased liquidity from lower borrowing costs typically boost Bitcoin's appeal as a hedge against fiat devaluation Bitrue^[2]. Institutional investors also signaled growing interest, with nearly 60% planning to double digital asset exposure in 2025 Coindesk^[1].

The market's technical setup suggests short-term volatility. Derivatives data indicated that BTC perpetual short positions faced liquidation risks above $121,600, while open interest in global BTC futures neared record levels of 755K BTC Coindesk^[1]. Conversely, Bitcoin's dominance rate in the total crypto market rose to 59.36%, signaling a return of capital to the top asset amid waning altcoin momentum Coindesk^[1].

The Fed's rate cut could catalyze a "melt-up" scenario, similar to the 1999 tech bubble, as lower yields drive capital into risk assets Bitcoin Magazine^[4]. However, risks persist. A 50-basis-point cut, though less likely due to inflation concerns, could signal deeper economic issues, increasing stagflation fears Bitrue^[2]. Additionally, regulatory uncertainty and macroeconomic headwinds, such as a sluggish labor market, could cap gains Forbes^[3].

The SEC's delayed approval of crypto ETFs, including XRP and Litecoin funds, added complexity to the market landscape Worldcoin Index^[5]. While approvals could enhance institutional adoption, prolonged uncertainty weighed on sentiment, with prediction markets adjusting odds of XRP and Litecoin ETF approvals to 77% and 79%, respectively Worldcoin Index^[5].

Looking ahead, the Fed's post-meeting communication will be critical. A dovish tone hinting at further cuts could prolong the bullish momentum, while a hawkish pivot might trigger short-term weakness Forbes^[3]. Bitcoin's 200-week moving average at $52,000 remains a key level to monitor, with potential for a parabolic rise or correction in 2026 depending on macroeconomic outcomes Bitcoin Magazine^[4].