Bitcoin News Today: Bullish Bets Clash with Bearish Hedges as Fed Rate Cut Looms

Bitcoin's volatility is poised to intensify as markets anticipate a Federal Reserve rate cut later this month, with implied volatility metrics hitting multi-month highs. Polymarket bettors price in a 91% probability of a 25-basis-point reduction at the October 28-29 meeting, despite delayed data releases due to the U.S. government shutdown. This expectation has driven a surge in Bitcoin's implied volatility across 14-, 30-, and 90-day expiries to their highest levels in 30 days, signaling heightened anticipation of significant price swings Bitcoin Ready for 'Big Moves' on 91% Chance of Fed Rate Cut^[1].

The potential rate cut is already influencing market positioning. Derivatives data shows elevated open interest in Bitcoin futures near record levels, with leveraged short positions at risk of liquidation above $121,600. A sustained breakout could trigger a short squeeze, pushing prices toward record highs, according to analytics firm Glassnode Bitcoin Ready for 'Big Moves' on 91% Chance of Fed Rate Cut^[1]. Conversely, bearish analysts warn of a "sell-the-news" dip if the rate cut fails to meet inflated expectations. Historical precedents, such as the 2023-2024 October volatility spikes, suggest Bitcoin's implied volatility index has reached 42, mirroring seasonal patterns Bitcoin Ready for 'Big Moves' on 91% Chance of Fed Rate Cut^[1].

Institutional adoption of digital assets is accelerating, with nearly 60% of surveyed institutions planning to increase crypto exposure in the next year. State Street's 2025 Digital Assets Outlook projects average portfolio allocations to double from 7% to 16% by 2028, driven by tokenization of private equity and fixed income. Bitcoin remains a key performer, with 27% of respondents citing it as their top digital asset for returns . However, regulatory uncertainty persists, particularly around decentralized finance (DeFi). A counter-proposal from Senate Democrats seeks to place high-risk DeFi protocols on a "restricted list," sparking criticism that it could stifle innovation and drive U.S. development offshore Senate Democrats’ DeFi Regulation Draft Triggers Bipartisan Heat^[5].

Market participants are also navigating macroeconomic headwinds. While a weaker dollar typically supports Bitcoin as a hedge, lingering inflation above the Fed's 2% target and a slowing labor market could cap gains. Peter Schiff, economist and gold advocate, argues that aggressive rate cuts risk triggering quantitative easing and eroding the dollar's reserve status, potentially accelerating capital flows into gold and silver Bitcoin Faces Pressure Ahead of Fed Rate Cut Decision^[3].

Derivatives activity underscores the market's divided outlook. Open interest in October 31 expiry options on decentralized exchange Derive is concentrated in bullish call options at $128,000 and $145,000 strikes, reflecting optimism. However, Deribit's call-put skew for Bitcoin remains mildly negative, indicating a protective bias toward downside hedging Bitcoin Ready for 'Big Moves' on 91% Chance of Fed Rate Cut^[1].

The Fed's post-meeting press conference will be critical, as policymakers' tone could amplify or temper market reactions. A dovish stance hinting at further cuts could extend risk-on sentiment, while a cautious or hawkish pivot may trigger profit-taking or sell-offs. Analysts caution that stagflation risks and regulatory developments, such as the SEC's ETF approvals, will remain pivotal in shaping Bitcoin's trajectory Institutions Expect Digital Asset Exposure to Double by 2028, State Street Survey Finds^[4].