Bitcoin Holds $113K as Futures Liquidity Tightens Ahead of Fed Rate Cut
Derivatives traders trim exposure before the FOMC as funding and liquidity metrics narrow across exchanges.
Bitcoin steadied around $113,000 on Wednesday as derivatives traders reduced leverage and open interest slipped ahead of the Federal Reserve’s Oct. 28–29 meeting, where officials are expected to cut rates by 25 basis points to the 4.00%–4.25% range.
Derivatives Volumes Dip as Fed Looms
Crypto derivatives markets entered defensive mode this week, with declining liquidity and thinner order books mirroring caution across equities. Data from CoinGlass shows aggregate BTC futures open interest down nearly 6% from mid-October levels, while funding rates on perpetual contracts remain flat, indicating a neutral to mildly bearish positioning.
Spot BTC traded at $113,000 in Asia hours, down 0.7% on the day but still 4.5% higher over the week. Ether (ETH) slipped 1.4% to $4,028, while Solana (SOL) and BNB fell roughly 2%. XRP held firmer at $2.62, extending a seven-day outperformance as traders rotated toward higher-liquidity pairs.
Institutional Capital Stays Sticky Despite Treasury Shift
According to Kraken economist Thomas Perfumo, “the fluctuating macroeconomic backdrop is the dominant driver of this crypto cycle.” Markets have already priced another cut by December, but October’s $1.2 billion liquidation event revealed lingering fragility.
Perfumo noted that while corporate treasury demand (e.g., MicroStrategy) has slowed, ETF inflows remain structurally bullish, cushioning drawdowns. This divergence highlights crypto’s deepening integration with traditional finance, even as risk appetite thins in the short term.
Liquidity Compression and CEX Order-Book Decline
Market depth across major centralized exchanges has dropped to about 40% of pre-October averages, said Foresight Ventures partner Alice Li. Renewed stress among U.S. regional banks could accelerate a Fed balance-sheet pause, though inflation risks may delay such a move.
Exchange-linked tokens such as BNB and OKB outperformed peers amid balance-sheet recalibration, while speculative altcoins saw fleeting, event-driven spikes. The sharp drop in perpetual funding activity and cross-exchange liquidity suggests traders are waiting for Powell’s tone before repositioning.
Volatility Poised to Return Post-FOMC
Despite thinning liquidity, Bitcoin’s technical setup remains constructive. FxPro analyst Alex Kuptsikevich said BTC continues to trade above its 50- and 200-day moving averages, maintaining a bullish structure with resistance near $117K–$120K.
Should Powell hint at slower easing, derivatives implied volatility (IV) could jump sharply as traders reprice risk across futures and options curves.
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