Bitcoin News Today: Bitcoin's October Crossroads: Fed Rate Cut Could Fuel Rally or Trigger Sell-Off

Bitcoin's price trajectory remains closely tied to U.S. Federal Reserve policy decisions, as markets anticipate a 91% probability of a 25-basis-point rate cut in October 2025, according to Polymarket data Coindesk^[1]. This expected reduction, setting the federal funds rate to 3.75%-4.00%, has already triggered heightened volatility in crypto markets, with Bitcoin (BTC) hovering near $121,667 Coingape^[2]. Analysts suggest that lower interest rates could drive capital into riskier assets like Bitcoin, while a weaker U.S. dollar-often a byproduct of rate cuts-may further bolster demand for the digital asset as a hedge against fiat devaluation Forbes^[3].

Historical precedents, such as the 2019 and 2020 rate cuts, show Bitcoin often rallies in response to Fed easing, though current conditions present unique challenges. Lingering inflation above the Fed's 2% target and a slowing labor market, evidenced by a September ADP jobs report showing a 32,000 drop in private payrolls, have introduced uncertainty The Tradable^[4]. Truflation's real-time inflation index, which stood at 1.99% in late September, suggests disinflation is progressing faster than official Bureau of Labor Statistics (BLS) data indicates Truflation^[5]. If sustained, this trend could pressure the Fed to accelerate rate cuts, potentially benefiting Bitcoin through increased liquidity and a weaker dollar BeInCrypto^[6].

However, bearish voices caution against over-optimism. Traders on Coinglass note that Bitcoin's short-term volatility could lead to a 5%-8% correction, with altcoins like XRP and Solana facing sharper declines due to their higher risk profiles Coindesk^[1]. Additionally, the Altcoin Season Index at 60 hints at growing momentum for altcoins, but market rotation may remain uneven, favoring Bitcoin over smaller tokens Coingape^[2].

The Fed's communication post-rate cut will be critical. A dovish tone hinting at further easing could extend Bitcoin's rally toward $135,000, while a hawkish pivot might trigger a "sell-the-news" selloff Bitcoinist^[7]. Macro risks, including Trump-era tariff policies and a potential U.S. government shutdown, add layers of uncertainty, with JPMorgan estimating a 60% chance of a 2025 recession CoinPedia^[8]. These factors could weigh on risk assets, though Bitcoin's correlation with equities suggests it may also face downward pressure during market rotations Coin Revolution^[9].

Institutional flows remain a key driver. ETF inflows into Bitcoin have continued, with spot BTC ETFs accumulating $1.36 million in holdings Coingape^[2]. Meanwhile, Truflation's analysis of past disinflationary cycles indicates Bitcoin tends to surge following pauses or reversals in inflation trends, a pattern that could repeat as the Fed navigates its next move Bitcoinist^[7].

As the October 28-29 meeting approaches, investors are advised to monitor the Fed's post-meeting press conference for clues on future policy. A sustained dovish stance, combined with continued liquidity injections, could position Bitcoin for a multi-month rally. Conversely, any signs of economic instability or regulatory headwinds-such as delays in SEC ETF approvals-might cap gains, particularly for altcoins The Street^[10].