Key Highlights:
- The crypto market titters with heightened volatility as investors position for the Federal Open Market Committee meeting and US PCE data release.
- The CME Fedwatch tool priced in a 90.6% probability that the Fed will keep interest rates steady at 3.75%-4.00%.
- Bitcoin price holds its $80,000 support amid the development of a bullish continuation pattern called ‘flag pole.’
The crypto market braced for heightened volatility this week as Bitcoin’s price titters at the $80,000 psychological level ahead of the U.S. Federal Reserve’s interest rate decision. Following a short uptick of 0.07%, the global cryptocurrency market cap reaches $2.69 trillion as traders remain cautious of risk assets and follow a “wait-and-see” approach.
Crypto Market Awaits FED Decision and Warsh Speech
Within a week, the Bitcoin price dropped from $84,000 to $80,000, registering a loss of 4.74%. The pullback was triggered by a sell-off in U.S. technology stocks, renewed geopolitical tensions, and a wave of liquidation in crypto derivatives markets.
However, the coming week could continue to see notable volatility as investors brace for the Federal Reserve’s upcoming interest rate decision, critical U.S. inflation metrics, and a massive options expiry.
The Federal Open Market Committee (FOMC) is scheduled to meet on October 27-28. According to the CME FedWatch Tool, the market has priced in a staggering 90.6% probability that the central bank will hold the interest rate steady at the 3.75-4.00% target range.
Following the 25-basis-point rate hike in September—the Fed’s first increase in over three years—the potential rate pause is widely expected. Therefore, the upcoming Fed interest rate decision could already be priced in the digital market, and the next immediate market-moving catalyst lies in the forward guidance delivered by Fed Chair Kevin Warsh.
If the central bank adopts a hawkish tone, it would cement market expectations for another 25-basis-point interest rate hike at the final policy meeting in December. Prolonged high interest rates risk driving 10-year Treasury yields above 5%, prompting institutional capital to pivot away from spot crypto assets toward risk-free yields.
Sticky PCE Inflation Looms Large
In addition, the U.S. The Bureau of Economic Analysis will release the Personal Consumption Expenditure (PCE) data in October 2029. PCE is the Fed’s preferred index to gauge real consumer price trends.
Economists project the headline PCE inflation to rise to 3.6% year-on-year, compared to the 3.4% recorded in August. Meanwhile, the Core PCE, which excludes the volatile food and energy sectors, is forecasted to rise by 3.1% annually and 0.3% month-over-month. A hotter-than-expected print would signal persistent inflation pressure, giving the Fed a green signal to keep interest rates elevated in the next meeting.
| U.S. SEPTEMBER PCE INFLATION FORECASTS | |
| Metric | Expected Estimate |
| Headline PCE (YoY) | 3.6% |
| Core PCE (YoY) | 3.1% |
| Core PCE (MoM) | 0.3% |
Bitcoin Price Prepares Next Rebound With Flag Pole Pattern.
Since late September, the Bitcoin price has been trading in a narrow range between $86,500 and $79,500 on the daily chart. From a technical perspective, this consolidation represents a potential bull flag pattern that could bolster buyers to replenish the exhausted bullish momentum.
With a 0.2% uptick, the Bitcoin price today sits at the lower trendline of the flag pattern near $80,000. If the buyers continue to hold this pattern, the price of BTC could jump roughly 7.5% up to challenge the flag’s resistance trendline near $86,000.
An upside breakout from this resistance will accelerate the bullish momentum in price, and bolster Bitcoin to target overhead $98,000 and $106,286.
The coin price also retains its position above the 100-and-200-day exponential moving averages (EMAs), signalling a broader bullish sentiment in the crypto market.
On the contrary, if the Bitcoin price slips below the $80,000 support, the bullish thesis would be invalidated, and sellers could pressure the asset towards the $75,000 floor.
