5 min readBitcoin is holding steady on Wednesday after another volatile session on Tuesday as investors weigh up Fed rate cut optimism against escalating US-China trade tensions.
The largest cryptocurrency by market cap is hovering around 112k, having recovered from a low of 109k in the previous session. However, BTC, which has traded down 8% over the past 7 days, is struggling to gain momentum beyond this point. Ethereum has also recovered from yesterday’s 3890 low to trade back above 4100 today.
The total cryptocurrency market cap trades 0.8% higher over the past 24 hours to $3.79 trillion, indicating that the broader crypto market, although moving modestly higher, is struggling to gain traction. Meanwhile, Gold has risen above $4200 to fresh record highs, and US stocks are booking gains.
Fed Chair Powell fuels rate cut hopes
The recent sell-off has steadied after Federal Reserve Chair Jerome Powell hinted at another rate cut in October. Powell highlighted the weakness in the US labour market rather than inflationary pressures, indicating that the door was open for further monetary policy loosening. Powel noted that there was sufficient evidence from private data and internal Fed research to support the view that the labour market is cooling, despite the lack of data from the Bureau Labor Statistics due to the US government shutdown.
The market is now pricing in a 93% probability of the Fed cutting rates by 50 basis points before the end of the year, bringing back-to-back 25 basis point rate reductions in October and December.
The more dovish stance from the Federal Reserve chair is some well-needed good news for Bitcoin, which has had a roller coaster of a rise since Friday. The Bitcoin price plunged to 102k, a level last seen in June after President Trump threatened 100% tariffs on China, ramping up trade war fears, and amid a cascading liquidation event, the largest in crypto history.
Institutional demand remains solid, but whales are selling
Despite the recent price volatility, institutional demand has remained relatively solid. According to SoSo Value data, BTC ETFs recorded net inflows of $102.5 million on Tuesday, recovering from $326.5 million in net outflows on Monday. However, ETF inflows are still elevated in October at $4.78 billion. Persistent institutional demand helps to support the BTC price.
Bitcoin bears are doubling down on BTC short exposure, which could mean more downside is coming. Data from Lookonchain shows that a Hyperliquid whale has placed a short position worth $140 million, at 5x leverage. This follows another Bitcoin whale that shorted BTC last week, adding to a $500 million short position with 10X leverage.
While Bitcoin’s recovery from recent lows reflects improving sentiment, momentum remains fragile. Fed rate cut expectations offer near-term support, but lingering US–China trade tensions and whale short positions could limit BTC’s upside potential. Institutional inflows suggest underlying confidence remains intact, yet investors may wait for clearer macro signals and a meaningful break above 115k to regain bullish momentum.
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