BTC Holds $113,000 Amid Thinning Liquidity; Market Turns Cautious Ahead of Fed Week

Bitcoin Steadies Near $113K as Traders Brace for Fed Rate Decision

October 29, 2025 — Bitcoin (BTC) held steady near $113,000 on Wednesday as traders positioned defensively ahead of this week’s Federal Open Market Committee (FOMC) decision, with thinner liquidity and a firmer dollar weighing on broader risk sentiment.

The world’s largest cryptocurrency remains up 4.5% over the past week but slipped 0.7% in the last 24 hours, echoing a mild risk-off tone across major tokens. Ether (ETH) traded around $4,028, down 1.4%, while Solana (SOL) and Binance Coin (BNB) each lost about 2%. XRP outperformed, inching higher to $2.62 after a strong week of accumulation in high-volume markets.

Investors are closely watching the FOMC’s Oct. 28–29 meeting, where policymakers are widely expected to cut interest rates by 25 basis points, lowering the benchmark range to 4.00%–4.25%.

“The macro backdrop remains the main driver of this crypto cycle,” said Thomas Perfumo, Global Economist at Kraken. “A 25bps cut looks almost certain, but the October 10 sell-off reminded everyone how exposed crypto still is to macro shocks.”

Perfumo noted that while institutional capital remains committed, short-term trading enthusiasm has cooled. “Corporate treasuries such as MicroStrategy have slowed their pace of buying, but ETF inflows remain resilient. That tells you the institutional base for digital assets is still deepening even as speculative appetite fades,” he said.

Liquidity Squeeze Deepens as Market Turns Defensive

Traders are also monitoring signs of tightening liquidity across centralized exchanges, a development some link to renewed stress among U.S. regional banks and global macro uncertainty.

“Liquidity is thinning quickly,” said Alice Li, Partner at Foresight Ventures. “If regional bank stress worsens, the Fed could pause quantitative tightening sooner. But inflation risks mean policymakers can’t pivot too fast. BTC’s recent softness and broad altcoin weakness reflect that tension.”

According to Li, exchange-linked tokens such as BNB have stabilized after weeks of deleveraging, while smaller altcoins remain “purely event-driven and low conviction.”

Despite the cautious tone, market structure has shown signs of stabilization following the October 10 flash sell-off, which liquidated about $1.2 billion in leveraged positions. The total crypto market cap remains near $3.9 trillion, comfortably above key moving averages.

“Technically, bitcoin still looks healthy,” said Alex Kuptsikevich, Analyst at FxPro. “BTC continues to hold above its 50-day and 200-day moving averages. Resistance sits around $117K–$120K, but the rebound from $108K confirms the broader uptrend.”

Analysts warn that volatility could spike midweek if Fed Chair Jerome Powell signals a slower pace of easing or stresses persistent inflation risks — potentially testing market sentiment and liquidity depth across digital assets.

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