Bitcoin traded near $84,490 on Thursday, down from the $87,397 high reached Monday, as traders respond to rising expectations for another Federal Reserve rate increase. The CME FedWatch tool now puts October rate-hike odds at roughly 75%, with December odds near 59%.
The pullback follows a sharp rally that carried Bitcoin from the mid-$70,000s to an eight-month high in less than a week. The shift in Fed expectations reflects renewed inflation concerns, with Core PCE, the Fed's preferred inflation gauge, sitting at 3.4%—well above the central bank's 2% target. Fed Governor Michael Barr stated Wednesday that further policy adjustments are likely needed to bring inflation back to target.
Rate increases typically strengthen the dollar and lift returns on cash and government bonds, making non-yielding assets like Bitcoin less attractive. Higher rates also tend to squeeze market liquidity and raise the cost of leveraged trading, both historically pressuring crypto prices during tightening cycles.
The Fed's September 16 rate hike—its first since July 2023—brought the target range to 3.75%-4%. Fed Chair Kevin Warsh paired the increase with a dot plot projecting a median rate of 4.1% through 2027, initially leading markets to treat September's move as isolated. That sentiment has since reversed sharply.
Altcoin Market Divergence
Most top 10 cryptocurrencies are declining alongside Bitcoin. Ethereum is up 1.42% to $2,689, XRP is essentially flat at $1.52, and Zcash has dropped 2.5% to $1,527.57.
BNB and Solana are exceptions, posting 24-hour gains of 2.75% and 2.31% respectively. BNB reached $781.33 following Binance's $100 million purchase of Circle shares, which ties the exchange to five years of USDC growth. Solana climbed to $116.08 after gaining fresh institutional attention through Grayscale's Smart Contract Fund rebalance, which made BNB its largest holding at 30.6% weighting, edging out Ethereum at 29.47% and Solana at 29.15%.
Market Data
Crypto derivatives showed $348.33 million in liquidations in 24 hours, with $270.89 million hitting long positions and $77.43 million on the short side. Spot Bitcoin ETFs pulled in $998.9 million on Monday alone, their largest single-day haul in 11 months, while net 2026 flows into the funds turned positive for the first time this year at roughly $320 million.
Total crypto market capitalization sits at $2.93 trillion, having dipped around 2.5% from the $3 trillion level touched during last week's rally. The Crypto Fear and Greed Index reads 73, still in greed territory, while the Altcoin Season Index sits at 51.
The next major test arrives October 28 with the Fed's rate decision, when markets will determine whether this week's pullback signals a temporary pause or the beginning of a longer retreat.
