Bitcoin Breathes, Fed Rate Hike Probability Drops to 13%

After 24 hours of storm on the financial markets, the wind turns abruptly for investors. While an unexpected overheating of American inflation threatened the worst, tension eases on prediction markets. Between panic on the Fed rates in October and relief on derivatives, Bitcoin begins a decisive arbitrage phase.

In Brief

• The risks of Fed rate hikes in October collapse to 13% on Polymarket.
• Massive liquidations sharply decrease, allowing Bitcoin’s price to stabilize.
• The absence of aggressive announcement from Kevin Warsh reassures institutional investors and the markets.
• Investor enthusiasm remains strong, illustrated by spectacular trader movements in Taiwan.

Fed Rate Hike in October, the Spectacular Reversal on Polymarket

The start of the week was marked by a drop in bitcoin and strong macroeconomic nervousness. Following recent data on American inflation (CPI at 3.7% and surge of PPI), speculators feared that the Federal Reserve (Fed) might change its monetary path. The Polymarket platform immediately reacted by raising the probability of an interest rate hike in October to a worrying peak of 48.5%.

However, recent neutral signals issued by Kevin Warsh of the Fed quickly reversed the trend. The probability of a monetary tightening in October collapsed to return to historically low levels, sweeping away the specter of an imminent rate hike.

Macro / Market Indicator Panic Peak (Post-CPI/PPI) Current Situation (Post-Fed) Market Impact Probability of Rate Hike (Fed) 48.5% on Polymarket 13.5% (CME / Polymarket) Sharp decline in fears Probability of Status Quo (Pause) ~51.5% 85% to 86% Central scenario favored Crypto Liquidations over 24h Nearly 1 Billion $ vert{} 311 Million $ Leverage purge & Stabilization Rate Cut Outlook (Q4 Horizon) Postponed by the market Postponed to end of 2026/2027 Short-term volatility

Easing of Crypto Derivatives and FOMO on Global Markets

This spectacular drop in rate hike expectations immediately brought calm to the digital asset market. The purge of open positions stabilized, allowing Bitcoin’s price to firmly defend its major support zones. This cleaning of excessive leverage offers a healthier ground for future operations.

Meanwhile, the global bullish momentum continues to attract investors. In Taiwan, Bloomberg analyst Eric Balchunas reports an unprecedented FOMO phenomenon, that of institutional fund managers quitting en masse to day trade personally and benefit from the boom in stock markets. But what about bitcoin?

What Will the Fed’s Decision Reserve for Bitcoin?

In the short term, confirmation of a monetary pause by the Fed by the end of October should provide a real breath of fresh air to the crypto market. If the US central bank avoids any rate hike, the reduction in volatility on bonds could encourage a gradual return of capital towards bitcoin and Ethereum, targeting retesting higher resistances.

In the longer term, the trajectory remains dependent on global liquidity. If inflation refuses to sustainably decrease and pushes back any prospect of rate cuts to next year, bitcoin could evolve within a broad consolidation channel. Nevertheless, the current accumulation by large holders during down phases suggests that institutional investors already anticipate a strong year-end rally.

The fear of a rate hike recedes and gives bitcoin fresh air. After a salutary purge on derivatives, the market regains its stability. If the Fed confirms its status quo in October, the regained liquidity could propel crypto and BTC to new highs.