Bitcoin hovered near $113,000 in the Asian afternoon hours on Wednesday as traders positioned themselves cautiously ahead of the Federal Reserve’s policy decision this week, with fading liquidity and a stronger dollar weighing on sentiment across risk markets.
The world’s largest cryptocurrency is up 4.5% over the past week but has slipped 0.7% over the past 24 hours, reflecting moderate losses in major tokens. Ether Traded at $4,028, down 1.4%, while Solana’s BNB and BNB each declined about 2%. XRP held slightly near $2.62, extending a strong seven-day run as traders circled the high-volume token.
The moves come ahead of a pivotal federal Open Market Committee (FOMC) meeting on October 28–29, where officials are widely expected to cut benchmark rates by 25 basis points to the 4.00%–4.25% range.
“The changing macroeconomic backdrop is the dominant driver of this crypto cycle,” said Thomas Perfumo, global economist at Kraken. “A 25bps cut this week appears highly probable, and the market is already pricing in another in December. But the October 10 sell-off underscores how exposed cryptos and risk assets are to exogenous shocks.”
Perfumo noted that the balance between institutional inflows and Treasury demand has shifted, tiring near momentum even as longer-term capital remains sticky.
“Demand from digital-asset wealth like MicroStrategy is slowing, but ETF flows continue to skew bullish, even in drawdowns,” he said. “That resilience reflects Crypto’s growing foothold with traditional finance, even as short-term risk tolerance has declined since the October liquidation event.”
Beyond the Fed, traders are also watching tight liquidity conditions. Early signs of renewed stress on US regional banks and a still-certain global macro environment left market depth lower across centralized exchanges.
“Liquidity is tight,” said Alice Li, partner at foresight ventures. “Early signs of stress in the US region could push the Fed to pause QT earlier, but inflation risks keep policymakers cautious. BTC extended the drawdown and altcoins sold off broadly as CEX order-book liquidity fell to around 40% of pre-drop levels.”
Names led by BNB led the relative outperformance as exchange-linked tokens stabilized following weeks of deleveraging, while speculative altcoins remained “PVP-fleeting, event driven, and low conviction,” Li added.
Despite the subdued tone, some analysts say crypto markets have stabilized after the October 10 flush that saw nearly $1.2 billion in leveraged positions wiped out. Total crypto capitalization sits around $3.9 trillion, comfortably above major moving averages, though sentiment remains fragile.
FXPRO analyst Alex Kuptsikevich noted that Bitcoin’s technical setup is still constructive: “BTC remains above the 50-day and 200-day moving averages.
As liquidity and leveraged positioning build again, volatility could spike around Wednesday’s announcement – especially if Powell’s tone signals a slower easing.
