Fed Holds Rates at 3.75%-4% as Bitcoin Stays Near $81,000

A pause that points toward another hike

On Wednesday, October 28, the Federal Reserve kept its benchmark rate unchanged in a range of 3.75% to 4%. The Fed had raised rates by a quarter point in September, which put the range at its current level.1 Markets had expected the hold. Before the announcement, CME FedWatch showed roughly a 90% chance of no change.56 The vote was not unanimous, though. The committee split 10-2, and Governor Lisa Cook and Cleveland Fed President Beth Hammack both voted for another 25-basis-point increase.37

The split is the main news here. The decision to hold matters less than the fact that two members wanted to tighten again. September's hike was the Fed's first since July 2023 and passed 12-0.316 One month later, the committee is divided over whether it is pushing hard enough on inflation, and the members who disagree want higher rates, not lower ones. Bitcoin Magazine reported that this is the first time since 1992 that a Fed governor and a regional bank president have dissented together on the same side.15

Bitcoin barely moved. It stayed near $81,000, inside a narrow range traders have watched for weeks, and its volatility has fallen to levels last seen in 2023.1418 Taken together, the coverage describes a market that has already priced in tighter policy and is now waiting for the next data releases.

What the statement changed

The statement still says inflation "remains elevated." It adds that "the accumulation of more information" will help the committee choose the right policy to bring inflation back to 2%.1 Side-by-side comparisons of the September and October texts show the Fed removed its earlier language tying a hike to a faster return to 2% inflation, and it upgraded its description of growth from "solid" to "strong."1015

On the surface, waiting for more information sounds neutral. My reading is that it isn't. The committee says growth is strong, inflation is running hot, and two voters already wanted to raise rates. That combination suggests the pause is about timing, not a change of direction. Bitcoin Magazine reached the same conclusion, saying the overall signal points toward tightening.15 Business Insider pointed out that most officials in the September dot plot expected one more hike before year-end.8 Seeking Alpha put officials' year-end rate projections between 4.1% and 4.4%.9

The inflation figures support that view. September CPI rose to 3.7% from 3.4% in August, and rising gasoline prices were a big part of the increase.16 CNBC reported before the meeting that higher energy costs were making the outlook harder to read.4 Kiplinger noted that stocks gave back some gains late in the session as markets priced in a greater chance of more conflict in the Middle East.5 crypto.news cited reports of possible U.S. military action against Iran as a new source of concern about oil prices and inflation.17

Warsh's other announcement: fewer rate meetings

At the press conference, Chair Kevin Warsh announced a structural change. The FOMC will keep eight meetings a year, but starting in 2027 one of them will be devoted entirely to broad monetary policy strategy, with no rate vote and no policy statement.2 In 2028 the Fed plans two strategy meetings, leaving six for setting policy.2 The Crypto Times reported Warsh as saying five internal task forces are still working on policy reviews.6

This matters more than it might seem. Fewer meetings with a rate decision means fewer scheduled moments when markets can reprice expectations. Each remaining decision will probably carry more weight, and speeches by officials and data releases may move markets more between meetings. Kiplinger reported that stocks were reassured by Warsh's explanation of the pause and by the meeting changes, at least for part of the session.5 It is too early to say whether that holds up once traders get used to fewer decision dates.

Warsh was also asked whether the midterm elections, now a week away, affected the decision. He said politics "played no role," that the election was not discussed, and that the coming weeks are an "information-rich interval" unrelated to politics.3 Some analysts saw it differently before the meeting. One economist told CNBC the Fed would not hike in October because the election was so close.4 Both explanations lead to the same result: whatever the reason, December now looks like the meeting where a hike is decided.

How much is priced for December

Outlets agree that a December hike is likely but give different numbers. Fox Business said CME FedWatch put the odds of a quarter-point hike at 82.6% after the decision, up from 78.3% the day before.3 Kiplinger and Admiral Markets both put it at about 85%, which would lift the range to 4%-4.25%.510 Bitcoin Magazine said some pricing put the odds near three in four.15 Decrypt, via Yahoo Finance, reported that the odds were above 70% before the announcement.19 The gaps mostly reflect when each figure was taken, but the trend is the same in all of them: the hold made a December hike more likely, not less. The next decision is on December 9, with new economic projections.10

The bond market leaned the same way. Admiral Markets reported the 10-year Treasury yield up about 5 basis points to 5.04% by mid-afternoon.10 CoinDesk noted the 2-year yield rising to 4.78% right after the statement, then falling back to 4.73% while Warsh spoke.12 A 10-year yield above 5% is a real problem for any asset that pays no yield, as the next section explains.

The Fed is not alone. The Bank of Canada raised its rate by 25 basis points to 2.5% the same morning. The Reserve Bank of Australia, which meets November 3, is also widely expected to hike.10

Bitcoin: a small move after the decision

The crypto coverage agrees on the outcome: bitcoin ended the day around $81,000. It differs on the details. Bitcoin.com News said bitcoin hit an intraday high of $81,687 before the decision, dropped below $80,400, and then recovered to about $81,000 in the minutes after the announcement.14 Bitcoin Magazine described a spike to about $81,700 after the announcement, a fall below $80,500, and a recovery.15 Decrypt measured a gain of about 0.2%, to around $80,950.19 CoinDesk tracked a slow climb to $81,100 as Warsh spoke.12 Whatever the exact sequence, the price stayed within a range of roughly $1,300, and the decision did not push it out of the $80,000-to-$82,000 band it has been stuck in.14

Derivatives data explain much of the intraday movement. Coinglass figures cited by Bitcoin.com showed about $167 million in crypto liquidations across the market, about $110 million of them short positions. Bitcoin accounted for nearly $58 million.14 With most of the forced selling hitting bearish bets, the small rise looks more like shorts being squeezed than new buying.

There are signs of quieter accumulation underneath. Santiment reported net exchange outflows of 14,942 BTC, its largest one-day withdrawal in five weeks.17 crypto.news correctly notes that coins leaving exchanges can reflect custody transfers rather than buying.17 Spot bitcoin ETFs took in $110 million on October 26 and $176 million on October 27.15 That followed about $773.5 million in outflows on October 22 and 23.17 Glassnode found that realized losses fell from $630 million at the August low to $27 million during the October 24 decline, which means fewer holders are selling at a loss.18 The same firm warned that one-month realized volatility of about 25% could leave bitcoin exposed to a sharp move, and that bids right at $80,000 are thin.18

The pressure from rates is straightforward. Bitcoin pays no yield, so higher Treasury yields tend to pull money away from it.19 Iggy Ioppe, CIO at Theo, said bitcoin faces continued pressure while rates stay high.6 Fabian Dori, CIO at Sygnum Bank, pointed to PCE inflation data and Big Tech earnings as the next catalysts.6 FXStreet reported a separate shift: some speculative trading appears to be moving into equities. Hyperliquid's tokenized-stock markets averaged $2.6 billion in daily volume, more than its bitcoin perpetual futures at $2.4 billion.18

The bottom line

The Fed is leaning toward a hike, bond yields are above 5%, and bitcoin's support at $80,000 rests on thin order books. The ETF inflows and exchange outflows are real, but they have only kept the price steady, not pushed it higher. Several outlets describe Wednesday's move as a bounce rather than a breakout.1320 The likely test comes from the inflation data released before December 9. If prices keep rising, the case for a hike gets stronger, and bitcoin's range will be under more pressure than it was this week.