Bitcoin Poised for Significant Price Swings Amid 91% Chance of Fed Rate Reduction

By Omkar Godbole (All times are in Eastern Time unless specified otherwise). The bitcoin market is proving challenging to navigate due to its sharp price fluctuations. After a late Thursday decline from $123,000 to $120,000, BTC has rebounded to trade around $121,400, with notable increases in privacy-focused coins like Zcash and Dash. The CoinDesk 20 Index has bounced back to 4,178 points from its overnight low of 4,097. This heightened volatility is likely a result of anticipation surrounding another potential Federal Reserve rate cut later this month. According to Nick Forster, founder of the decentralized exchange Derive, 'Bitcoin volatility is on the verge of a breakout, with implied volatilities across various expiries surging to their highest levels in the past month, indicating increased expectations of significant price movements ahead.' Forster noted that this so-called volatility spike comes as markets anticipate a nearly certain 25 basis point rate cut by the Federal Reserve at its October 28-29 meeting, despite the ongoing government shutdown delaying key data releases. Polymarket bettors have priced in a 91% chance of the Fed reducing rates by 25 basis points, following the central bank's previous rate cut to 4% last month. In separate news, State Street's 2025 Digital Assets Outlook revealed that nearly 60% of institutional investors plan to increase their digital asset exposure in the coming year, with average exposure expected to double within three years. Additionally, several U.S. Democratic senators have reportedly proposed a countermeasure to the market structure bill, involving a 'restricted list' for DeFi protocols deemed too risky, which could potentially hinder regulatory progress and undermine bipartisan support for the Clarity Act. Chainlink has also launched a Chainlink-grade RPC endpoint for the HyperEVM testnet, providing developers in the HyperliquidX ecosystem with infrastructure for innovative solutions. In traditional markets, the dollar index remains at two-month highs as China tightens its grip on rare earth exports ahead of an expected meeting between Xi and Trump in South Korea later this month.