Bitcoin Hits $116K as Fed Dovish Bets Fuel Crypto Rally

Bitcoin’s breakthrough to $116,000 represents a convergence of macroeconomic factors creating ideal conditions for crypto gains. Traders are betting heavily on the October 29 Federal Reserve meeting as the primary catalyst, anticipating easier financial conditions that typically support risk assets. The softer dollar index hovering in the high-98s and subdued long yields near 4% on the US 10-year Treasury provide the exact backdrop crypto markets need to rally.

Lower interest rates reduce the opportunity cost of holding non-yielding assets like Bitcoin and ease financial conditions broadly, making speculative investments more attractive. This shift in market sentiment follows cooler CPI data that revived institutional appetite after October’s sustained outflows. As of press time, Bitcoin traded at $114,683.03, up 0.15% over 24 hours, with traders treating sub-$115,000 levels as entry points rather than resistance.

The reversal in digital asset flows has been dramatic, with CoinShares reporting $921 million of net inflows into digital asset products for the latest weekly period. This substantial capital movement explains why dip-buyers showed conviction this week, fundamentally changing the market dynamic from October’s risk-off stretch. The shift demonstrates renewed institutional confidence in crypto assets as viable investment vehicles.

Derivatives markets played a crucial role in amplifying the move, with hundreds of millions in short liquidations hitting over the weekend and early October 27 according to CoinGlass estimates. As bears were forced to exit positions when Bitcoin cleared key technical levels, this squeeze dynamic magnified spot demand and accelerated the rally once resistance broke. The resulting momentum created the thrust that carried BTC toward $116,000, demonstrating how technical factors can compound fundamental improvements in sentiment.

While Bitcoin led the charge with modest gains, major altcoins showed mixed performance that suggests capital concentrated in Bitcoin rather than rotating broadly across crypto markets. Ethereum traded at $4,148.13, down 0.2% over 24 hours, while Solana fell 0.1% to $199.82. XRP gained 0.1% to $2.64, and BNB rose 0.5% to $1,143.17. Cardano dropped 1.3% to $0.6725, and Dogecoin declined 1.5% to $0.2026, indicating selective rather than blanket crypto enthusiasm.

Supply-side pressure eased at the margin with Mt. Gox’s trustee extending the creditor repayment deadline by one year to October 31, 2026. This development removes near-term forced selling risk from an overhang that has weighed on market sentiment for months. The formal extension appeared in the trustee’s notice and reduces one variable that traders had frequently cited as a significant headwind, providing additional fundamental support for the current rally.

Despite the recent tailwinds, significant risks remain that could quickly reverse current market optimism. The same ETF and fund cohort that bought aggressively this week were net sellers in mid-October, demonstrating the fickle nature of institutional participation. Federal Reserve messaging possesses the power to reverse risk sentiment almost instantly, creating vulnerability for Bitcoin’s recent gains.

If rate-cut odds fade or the dollar rallies sharply, the macro tailwinds currently supporting Bitcoin could transform into headwinds with equal speed. This week’s Federal Reserve decision will serve as the ultimate test of whether today’s bullish positioning holds or unwinds. The market’s dependence on dovish policy expectations means any hawkish surprise could trigger substantial volatility, reminding investors that crypto rallies built on macro narratives remain vulnerable to shifting central bank priorities.