Crypto Market Amid Changing Interest Rate Cut Expectations: Is a Major Correction Still Possible?
TL;DR
At his October 29th press conference, Powell emphasized that "a rate cut in December is not a certainty," and the probability of a rate cut estimated by CME FedWatch plummeted from approximately 90% to approximately 68%. Affected by this hawkish hint and nearly $300 million in long positions being liquidated, Bitcoin fell back to around $110K. However, on-chain funds continued to flow out of exchanges, and the derivatives market was relatively balanced between long and short positions. The key technical support level of $109.3K has not yet been breached. Considering macroeconomic, on-chain, and technical indicators, short-term trading may continue to be characterized by high-level fluctuations. If the US data for November is again dovish, it is more likely to trigger a return of funds rather than a deep double-dip.
Core Analysis
1. Federal Reserve Policy and Macroeconomic Sentiment
| date | event | Probability of a December rate cut* | change |
|---|---|---|---|
| Closing price on October 28 | Pre-meeting pricing | ≈ 90% | — |
| After the FOMC meeting on October 29 | After Powell's speech | ≈ 68% | ↓ ≈ 22 pp |
*Data source: CME FedWatch tool summary. Powell stated that a December rate cut is "far from certain" and expressed concerns about tariffs pushing up inflation and the employment data gap, causing the market to quickly reduce its bets. cnbc
- US stock performance: The Dow Jones Industrial Average fell 0.16%, the S&P 500 was essentially flat, and the Nasdaq Composite rose 0.5% to a new high, reflecting the continued resilience of technology stocks in the face of liquidity challenges. (investopedia)
- U.S. Treasury yields rose slightly and the dollar index strengthened, reflecting a cooling of risk appetite but no panic.
2. Cryptocurrency Market Price Dynamics
| index | Changes on October 29 | October 30, 02 UTC |
|---|---|---|
| Global market capitalization | -1.6% to $3.89 T | $3.83 T dropped another 1.2%. |
| BTC price | High $113 K → Low $110 K | ~$110.7 K (24h -2.3%) |
| ETH price | $3,998 → $3,890 | ~$3,930 (24h -3.4%) |
| 24-hour margin call | Long position ≈ $300 M | — |
The market reaction was one of initial rise followed by a sharp drop, primarily driven by hawkish rhetoric and the liquidation of highly leveraged long positions. (coindesk yahoo)
3. On-chain fund flows
- Over the past 7 days, exchanges have seen a net outflow of approximately 25–30 K BTC, bringing total exchange reserves down to approximately 2.39 M BTC, a weekly drop of 1.2%, which is at a multi-year low, indicating limited active selling pressure.
- There were over 6,000 transactions involving whale(>1,000 BTC), 60% of which were withdrawals from exchanges , and there was no concentrated sell-off.
- The proportion of addresses holding 10K+ BTC increased by 1.7% week-on-week, retail holdings remained stable, and the overall pattern was one of accumulation rather than distribution .
4. Social Emotions
| Account | Stance | Main Viewpoints (Excerpt) | |------|------|------------------| | @cryptorecruitr | Medium-term bullish | QT ending + liquidity return = good opportunity for long-term investment | x.com | | @CryptoMichNL | Slightly bullish | BTC pullback limited, watch for rebound after labor data | x.com | | @MaxCryptoxx | Short-term bearish | Be cautious below 112K, a break below 109K may lead to further declines | x.com |
The overall discussion is divided into two camps: "short-term FUD + buying on dips," with a slightly bullish bias that leans more towards neutral .
5. Technical Analysis and Derivatives
| Dimension | status quo | Explanation |
|---|---|---|
| spot price | ~$110.9 K, holding above the 1D Bollinger middle line | Still higher than SMA200 |
| Support/Resistance | S1 $109.3 K; S2 $105.7 K / R1 $112 K; R2 $114.2 K | 109.3 K is a strong support level where the BB+EMA converges. |
| Opening positions interest | OI $75 B, 24h +2.1% | The rebound in OI during the decline indicates new position speculation. |
| Funding Rate | +0.0019% (Binance 8h) | Long positions require minimal fees, and leverage is not extreme. |
| Options Max Pain | $112 K | There is a "magnetic" effect around the price level. |
| Liquidation risk | The bullish consolidation zone is $109–108, with a cumulative $1.5 billion. | A break below S1 could trigger a sharp drop, but there's also $2.50 short covering above. |
Technical conclusion : Short-term indicators are bearish (4H RSI 39.9), but the daily MACD shows a positive divergence and the exchange is experiencing net outflows. A significant drop would require a break below 109K with increased volume; otherwise, it is more likely to fluctuate within the 109-114K range while awaiting the November macroeconomic data.
Market Outlook and Risks
Macroeconomic triggers
- If November employment/inflation exceeds expectations or Powell continues to be hawkish, the probability of an interest rate cut may be revised downwards further, and a breach of the 109K level would trigger a chain reaction of long liquidation .
- Conversely, if data supports a December rate cut or QT exits liquidity, the bulls may be able to push the price up again to above 114K .
On-chain and liquidity
- The continued decline in exchange reserves provides a natural buffer against medium- to long-term market crashes.
- Be wary of a sudden increase in whale positions flowing back into CEX (which can be monitored via CryptoQuant's "Exchange Netflow").
Derivatives Leverage
- If the funding rate continues to rise and the price fails to break 112K, it indicates that the upward momentum is limited and the market is easily suppressed by the short sellers.
- Negative rates coupled with a decline in OI (Online Income) indicate that leverage has been cleared and the market is healthier.
in conclusion
Powell's hawkish stance led to a sharp drop in expectations for a December rate cut, triggering short-term sentiment volatility and a liquidation of long positions. However, on-chain data indicates that tokens are not flowing into exchanges but rather continuing to flow out; the key technical support level of $109.3K remains intact. Unless subsequent macroeconomic data further reduces market bets on rate cuts and prompts holders to actively sell, the current situation is more likely to evolve into a consolidation at high levels rather than a new round of "major correction." For investors, paying attention to November macroeconomic data and the continued direction of net exchange inflows will be crucial in determining the next trend.