Bitcoin took another step down the stairs on Wednesday, finding a temporary floor around $88,600. That’s a level we haven’t seen since the cherry blossoms were out in April. It also puts the world’s biggest crypto asset more than 5% in the red for the year 2025.
- Bitcoin dropped significantly following the release of the Federal Reserve’s October meeting minutes, which revealed deep divisions among policymakers regarding future economic direction. Some officials are concerned about slowing employment, while others fear persistent inflation risks.
- The Fed’s uncertainty has led markets to drastically reduce expectations for a December rate cut, shifting sentiment heavily toward holding rates steady. This indecision is exacerbating existing pressure on the cryptocurrency market.
- Derivatives markets show high leverage and optimistic long bets accumulating during the price correction, a structure that analysts warn often precedes further significant downside risk for Bitcoin.
The push came from an old-world source of anxiety. The Federal Reserve released the minutes from its October meeting. And the document reads less like a confident economic plan and more like a transcript of a heated family argument over directions.
The central bank’s officials are staring at what they call “two-sided risks.” It’s a polite way of saying they are stuck between a rock and a hard place. And they seem completely divided on how to get out.
Some policymakers are looking at the job market with concern. They see slower hiring, a climbing unemployment rate, and less demand for workers. To them, these are warning signs that the economy might be heading for a much sharper fall than expected.
But others are looking at their inflation gauges with equal worry. They see prices for goods, partly driven by tariffs, and stubborn costs in the service sector. These officials are saying inflation shows little sign of returning to its 2% target. Cutting rates too soon could just add fuel to that fire.
So what’s the plan? Well, there isn’t one. The Fed stressed that its policy is not on a “preset course.” December’s interest rate decision, it seems, is anyone’s guess.
The internal debate is a study in contrasts. A few participants think another rate cut is a good idea, a gentle nudge toward a more neutral position. Many others believe rates should stay put for the rest of the year. One official even argued for a bolder 50-basis-point cut, while another preferred to do nothing at all. It’s hard to steer a ship when the crew is pointing at every point on the compass.
Prediction markets, which are basically betting platforms for news events, reacted instantly. On Polymarket, the chances of a quarter-point rate cut in December plummeted from 52% to just 30% after the minutes came out. The odds of the Fed holding rates steady jumped from 46% to nearly 70%. The CME FedWatch tool, which tracks futures markets, showed an almost identical shift in sentiment.
A Dangerous Game of Catch
This cloud of economic uncertainty is drifting over the crypto markets, and it’s turning a drizzle into a downpour. Bitcoin was already having a tough time. The Fed’s indecision just made things worse.
According to Vetle Lunde of K33 Research, the situation in the bitcoin derivatives market is becoming “dangerous.” He’s watching traders pile on aggressive, leveraged bets even as the price continues to fall. It’s a classic case of trying to catch a falling knife.
Let’s put that in perspective. Open interest in perpetual futures, which are contracts that let traders bet on bitcoin’s price without an expiration date, has shot up by over 36,000 BTC. Lunde notes this is the largest weekly jump since April 2023. A lot of money is suddenly betting on a sharp reversal.
At the same time, funding rates have turned positive. This means traders who are long (betting the price will go up) are paying a fee to traders who are short (betting the price will go down). The optimists are so sure of a rebound that they’re willing to pay for the privilege of waiting for it. A rebound that, so far, has refused to show up.
Lunde says this structure, with high leverage and hopeful longs piling in during a correction, often precedes more pain. He sees a potential bottom forming in the $84,000 to $86,000 range. But if the selling gets heavier, he warns we could see a retest of the April low near $74,500.
It’s a high-stakes game. These leveraged traders are hoping for a heroic save. But if the price keeps dropping, their positions could be liquidated, forcing a cascade of selling that pushes the market down even faster.
Nowhere to Hide
This isn’t just a Bitcoin story. The anxiety is spreading across the entire crypto landscape. There are very few safe harbors when the main ship is taking on water.
Ethereum, the second-largest cryptocurrency, fell to around $2,870. It’s the first time it has traded below the psychologically important $3,000 mark since July. For months, that level acted as a solid floor. Now, it’s a ceiling.
XRP has also taken a heavy blow. The token is sliding toward the $2 mark, a price it hasn’t seen in about five months. For many altcoins, the recent gains of late summer are quickly evaporating.
The market is caught. It’s looking for a clear signal, a reason to feel confident again. Instead, it’s getting muddled messages from the world’s most powerful central bank and a derivatives market that looks increasingly fragile.
The Fed’s next meeting is just weeks away. Until then, traders are left to wonder which risk the bank fears more. And whether those knife-catchers have hands of steel or hands of glass.