FOMC expected to hold rates as Bitcoin hovers near $80,000, Ethereum at $2,315

The Federal Open Market Committee (FOMC) will announce its latest decision on interest rates this Wednesday, with cryptocurrency markets closely monitoring the outcome. As of October 27, Bitcoin traded near $80,000 while Ethereum remained around $2,315. The overall cryptocurrency market capitalization was measured at $2.67 trillion, marking a decrease of 0.68% over the preceding 24 hours, reflecting ongoing uncertainty ahead of the Fed’s move.

Investors anticipate steady policy, focus on inflation and jobs

With persistent inflation and softening labor market data complicating the outlook, many market participants expect the Federal Reserve to keep interest rates unchanged at this meeting. Following the September announcement, the central bank raised its benchmark rate by 25 basis points to a target range of 3.75% to 4.00%, citing inflationary pressures and its commitment to maintaining price stability.

The CME FedWatch tool indicated that market consensus for another rate hike is low, with only a 9.4% probability priced in for a 0.25 percentage point increase. Meanwhile, the Bureau of Labor Statistics reported monthly consumer prices rose by 0.6% and annual inflation reached 3.7% in September—a development increasing pressure on policymakers.

Gasoline prices surged 9.1% for the month, accounting for over half of the overall increase, while core inflation registered 2.6% year on year. The Producer Price Index (PPI) likewise climbed 1.3% in September and 6.3% over twelve months, signaling continued pricing pressures through supply chains.

Employment trends also cooled in September, with only 29,000 new jobs created and the unemployment rate steady at 4.2%. These factors have complicated the Federal Reserve’s choice heading into the FOMC meeting.

Crypto analyst Crypto Rover noted that rising energy costs combined with weaker economic data paint a mixed picture: “Energy cost increases risk fueling more inflation, while weaker job growth could have a negative impact on equity markets.”

Institutional crypto flows show mixed signals

Institutional capital flows in digital assets reflected contrasting trends ahead of the FOMC decision. US spot Bitcoin exchange-traded funds (ETFs) recorded net inflows of $110.3 million on October 26, according to Farside Investors. BlackRock’s iShares Bitcoin Trust (IBIT) accounted for all of these inflows, a notable turnaround after two consecutive days previously saw $773.5 million in outflows.

Ethereum-based ETFs experienced continued outflows, with Farside reporting a net withdrawal of $88.6 million. BlackRock’s ETHA ETF alone saw $104.7 million in outflows, while Fidelity’s FETH ETF received $16.1 million in new capital—insufficient to offset broader redemptions.

These flows suggest institutions remain cautious, awaiting clarity on monetary policy and broader macroeconomic conditions.

CryptoQuant: Watch for signs of the next Bitcoin rally

Dan, an analyst at CryptoQuant, expressed a cautiously optimistic outlook regarding Bitcoin’s potential for a rally. He pointed to historical data showing that strong upward price moves tend to follow periods when the share of coins held for more than 18 months first rises, then falls.

CryptoQuant analysis emphasized that while the market has entered a bullish phase, “a decisive rally signal has not yet emerged.”

Dan also observed that investor participation in the current rally remains limited, hinting at significant room for additional buyers if market sentiment improves.

On the corporate side, Bitmine purchased 10,452 ETH last week, boosting its holdings to 6,051,933 ETH by October 25. Meanwhile, Strategy, which manages institutional digital asset exposures, held 848,517 BTC but made no new Bitcoin acquisitions in the past week instead opting to repurchase $205 million in preferred shares.

These differing strategies demonstrate how companies are navigating a volatile market environment as they weigh risks and opportunities tied to macroeconomic events.

Mini dictionary: CryptoQuant, a blockchain analytics platform, provides on-chain market data and analysis to inform trading and investment decisions in the cryptocurrency sector. It is widely recognized for its insight into investor behavior and long-term market trends.

Outlook remains cautious ahead of Fed decision

As the FOMC meeting nears, investors are expected to closely monitor any comments from Chair Kevin Warsh for indications of future tightening or potential easing in December. The absence of new quarterly projections at this meeting places additional focus on Warsh’s post-decision press conference for guidance.

Any hawkish guidance from the Fed could raise borrowing costs and apply further downward pressure on risk assets like cryptocurrencies. Conversely, a dovish tone may stimulate risk appetite despite lingering inflationary risks.

At present, the combination of mixed ETF flows and varying corporate treasury actions has left crypto markets waiting for clearer signals from both policymakers and institutional investors.