Bitcoin Holds $113K as Liquidity Tightens, Traders Brace for Fed Rate Cut
October 29, 2025 — Bitcoin (BTC) traded steadily around $113,000 on Wednesday as traders adopted a defensive stance ahead of this week’s Federal Reserve policy meeting, with shrinking market liquidity and a stronger dollar keeping risk appetite subdued.
The top cryptocurrency remains up 4.5% over the week but slipped 0.7% in the past 24 hours, mirroring mild losses across the broader market. Ether (ETH) dipped 1.4% to $4,028, while Solana (SOL) and Binance Coin (BNB) each fell about 2%. XRP extended its recent outperformance, holding near $2.62 amid continued rotation into high-volume tokens.
Markets are eyeing the Federal Open Market Committee (FOMC) meeting on Oct. 28–29, where officials are widely expected to lower interest rates by 25 basis points to a range of 4.00%–4.25%.
“The macro backdrop is still driving this crypto cycle,” said Thomas Perfumo, Global Economist at Kraken. “A 25bps cut seems almost certain, but the October 10 sell-off reminded investors that crypto remains highly sensitive to external shocks.”
Perfumo noted that institutional inflows remain steady, though short-term momentum has cooled. “Corporate treasury demand from players like MicroStrategy has slowed, but ETF flows remain net positive — showing crypto’s growing integration into traditional finance even as traders turn cautious,” he said.
Market Liquidity and Risk Tone
Beyond the Fed, traders are watching for signs of tightening liquidity across centralized exchanges. Renewed stress among U.S. regional banks and persistent global uncertainty have pushed market depth to roughly 40% of pre-selloff levels, according to several market participants.
“Liquidity is thinning rapidly,” said Alice Li, Partner at Foresight Ventures. “If regional bank risks rise, the Fed could pause QT sooner than expected, but inflation still limits how much flexibility policymakers have. BTC and major altcoins are reflecting that tug-of-war.”
Li added that exchange-linked tokens, led by BNB, showed relative resilience after weeks of deleveraging, while smaller altcoins remain speculative and event-driven.
Despite the defensive tone, analysts say the market is stabilizing following the October 10 flush, which liquidated nearly $1.2 billion in leveraged positions. Total crypto market capitalization sits near $3.9 trillion, holding comfortably above key technical levels.
“Bitcoin remains technically sound,” said Alex Kuptsikevich, Analyst at FxPro. “BTC is trading above its 50- and 200-day moving averages, with strong support at $108K and resistance in the $117K–$120K zone.”
As leveraged positions rebuild and liquidity remains thin, analysts expect volatility to spike around Wednesday’s Fed announcement — particularly if Chair Jerome Powell signals a slower path toward rate cuts or highlights persistent inflation pressures.
