Bitcoin Breakout Cools as Fed Rate-Hike Bets Climb

Bitcoin traded near $84,490 Thursday, down from the $87,397 high it touched Monday, as traders price in higher odds that the Federal Reserve raises rates again next month.

The pullback follows a rally that carried Bitcoin from the mid-$70,000s to an eight-month high in under a week. Inflation concerns have pushed October rate-hike odds to roughly 75%, with December odds near 59%, according to CME’s FedWatch tool.

A rate hike means higher borrowing costs across the economy, and it typically strengthens the dollar while lifting returns on cash and government bonds. That makes non-yielding, volatile assets like Bitcoin less attractive by comparison.

Higher rates also tend to squeeze market liquidity and raise the cost of leveraged trading, both of which have historically weighed on crypto prices during tightening cycles.

Wednesday’s move was the Fed’s first rate hike since July 2023, when it lifted the benchmark to a range of 5.25%-5.5% before shifting into a cutting cycle the following year. The September 16 increase, approved unanimously in a 12-0 vote, brought the target range to 3.75%-4%.

Fed Chair Kevin Warsh paired the hike with a dot plot projecting a median rate of just 4.1% through the end of 2027, which traders read as leaving room for only one more move rather than a sustained tightening campaign.

That dovish framing sent rate-hike odds tumbling in the days after the meeting, with markets initially treating September’s move as a one-and-done. The calm didn’t last.

BitcoinBTC · USD

$84,364+9.92%

24H7D1M1YYTD

Sep 17Sep 19Sep 21Sep 22Sep 24

$87.2k$83.6k$80.0k$76.4k

24h HighHigh$84,843

24h LowLow$82,941

VolVol$1.6B

Market projectionsOdds by Myriad

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Odds of another hike before year-end, even as soon as October, climbed to 68.5% on Myriad Markets, the predictions platform built by Decrypt’s parent company Dastan; while CME’s FedWatch tool now puts the chance of a 25-basis-point October move at roughly 75%, up sharply from where it sat right after the September decision.

Fed Governor Michael Barr said Wednesday that further policy adjustments are likely needed to bring inflation back to target, and an S&P Global report the same day showed inflation running at its highest level in nearly four years.

Core PCE, the Fed’s preferred inflation gauge, sits at 3.4%, well above the 2% target, giving policymakers a data-driven case for tightening again as soon as the October 27-28 meeting.

A cooling market

Most of the top 10 cryptocurrencies are cooling alongside Bitcoin. Ethereum is up just 1.42% over 24 hours near $2,689, XRP is essentially flat at $1.52, and Zcash has dropped 2.5% to $1,527.57—though that’s after an incredible run that’s seen ZEC climb more than 2,700% in the last year.

Hyperliquid, meanwhile, has slipped 0.37% to $93.04, giving back a slice of its recent run as traders lock in gains.

BNB and Solana are the exceptions. BNB is up 2.75% to $781.33, extending a move that took it past $790 this week for an 11% weekly gain after Binance’s $100 million purchase of Circle shares tied it into five years of USDC growth. Solana climbed 2.31% to $116.08, building on a run to a nine-month high above $117 last week.

Both tokens are also picking up new institutional signals that Bitcoin and Ethereum aren’t—at least not right now.

Grayscale’s Smart Contract Fund gave BNB a 30.6% weighting in its latest rebalance, edging out Ethereum’s 29.47% and Solana’s 29.15% to make BNB the fund’s largest holding. Solana separately picked up fresh demand after ZetaChain token holders voted 99.4% in favor of migrating the project’s token and AI app onto the Solana network.

The broader backdrop still leans bullish despite the pullback.

Spot Bitcoin ETFs pulled in $998.9 million on Monday alone, their biggest single-day haul in 11 months, and net 2026 flows into the funds turned positive for the first time this year at roughly $320 million.

Derivatives data shows $348.33 million in crypto liquidations in 24 hours, with $270.89 million of that hitting long positions after last week’s short squeeze left leveraged bulls exposed to the reversal, versus $77.43 million on the short side.

Total crypto market capitalization sits at $2.93 trillion, dipping around 2.5% from the $3 trillion level it touched during last week’s rally.

The Crypto Fear and Greed Index reads 73, still in “greed” territory despite the cooldown, while the Altcoin Season Index sits at 51—roughly the midpoint between a Bitcoin-led market and one where altcoins broadly outperform.

The next test lands October 28, when the Fed’s rate decision arrives and traders find out whether this week’s pause was a pit stop or the start of a longer retreat.