Fed Decision Moment: If Rates Stay on Hold, Will Crypto Break Out of Its Range? In-Depth Analysis
The Fed has arrived at one of the most critical crossroads of the year. For the decision to be announced at 02:00 on October 29 Beijing Time (14:00 ET on October 28), the market is almost locked into a single scenario: Rates will remain unchanged.
According to current data, 94 out of 100 economists in a Reuters poll expect the Fed to skip this meeting. CME FedWatch, Kalshi, and Polymarket data are also pricing in a 91%-95% probability of "no change". The target range will remain at 3.75% - 4.00%. This will be the first pause after the 25 basis point hike in September.
So why is it so important? Because the issue is not the rate decision itself, but the language behind the decision.
1. Macro Backdrop: Why Does the Fed Have to Pause?
Fed Chair Kevin Warsh (who succeeded Powell in May 2026) is squeezed on two fronts:
a) Inflation is still hot: With Brent crude settling at $116.72 on October 23, energy inflation is pushing headline PCE higher. Warsh's commitment to the 2% target continues, but he also acknowledges that AI investments could boost near-term demand.
b) Employment is cooling but not collapsing: Employment data points to slowing job growth. The Fed noted in its September minutes that "downside risks to employment rose in recent months." This increases the risk that aggressive tightening will push the economy into recession.
Result: The vast majority of brokerages expect a HOLD in October and a further hike in December with a 71% probability. So this is not a pivot, but a tactical pause.
2. What the Market is Really Focused On: 3 Critical Signals
What should we expect from the statement and Warsh's press conference?
1. Rate Path and Dot Plot: In September, the dot plot signaled 3 cuts for 2025, but after October, expectations for a December cut crashed from over 90% to around 30%. No new dot plot will be released this time, but whether Warsh says "December is still live" will be critical.
2. Balance Sheet Reduction (QT): The Fed has already announced it will stop shrinking its portfolio as of December 1. This is a hidden easing signal to the market. Whether Warsh announces a resumption of Treasury purchases in December will be decisive for liquidity.
3. Warsh's Tone: In his recent discussion with IMF Director Georgieva, Warsh avoided giving a clear signal about future decisions. According to JPMorgan Chief US Economist Michael Feroli, Warsh will need to explain the shift between the hawkish stance in September and the dovish pause in October.
3. What Does It Mean for the Crypto Market? Will the Range Break?
BTC has been stuck in the $112K - $118K range for the last 3 weeks. Can this decision break the range?
Scenario A - Hawkish Hold (60% Probability): The Fed holds rates but signals "Our fight against inflation is not over, a December hike is live." The dollar index (DXY) strengthens, the US 10-year yield jumps above 4.5%. Short-term correction for BTC: $110K support is tested, liquidity is drained from altcoins. This would be a repeat of the hawkish shock in October 2025.
Scenario B - Dovish Hold (40% Probability): The Fed holds rates, emphasizes the end of QT, and says "We are data-dependent, we are monitoring the risk of over-tightening." This would be an implicit victory for the market. DXY weakens, risk appetite increases. Breakout for BTC: If the $118K resistance breaks, a FOMO rally towards $125K begins. We would also see a recovery in the ETH/BTC ratio.
My focus is: More than the rate decision itself, the forward guidance of Warsh, who took over from Powell. Crypto is no longer just pricing in a rate cut, but when the liquidity tap will be turned on. The end of QT is the hidden QE of 2026.
Conclusion and Strategy
Short-term volatility is inevitable. It makes sense to reduce leverage before the decision and watch two levels after:
• For BTC: $110,000 as a stop-loss level, and a daily close above $118,500 as momentum confirmation.
• Trading strategy: Range trading before the decision, trend following after. Never open a position in the first 15 minutes while Powell/Warsh is speaking - the first move is always fake.
When the Fed stops, money doesn't talk; it whispers. Those who read that whisper correctly will catch the next bull wave.
Do you think the Fed will hike again in December? Let's discuss in the comments.
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