Bitcoin (BTC) traded at $80,472 on Sunday as financial markets prepare for a critical week defined by the Federal Reserve's interest rate decision, key inflation data, and a massive $10.97 billion crypto options expiry on Deribit.
Federal Reserve Rate Hold Expected Amid Midterm Election Pressure
The Federal Reserve meets Wednesday, with the CME FedWatch Tool assigning a 90.6% probability that the central bank will keep its key interest rate unchanged at 3.75% to 4.00%. This marks a sharp shift from one month ago, when traders assigned a 64.2% chance to a rate hike. Yardeni Research attributed the expected pause to the calendar, stating that the committee likely will not hike on Wednesday due to the upcoming U.S. midterm elections on November 3. Fed Chair Kevin Warsh is scheduled to address reporters at 2:30 p.m. ET on Wednesday.
Looking further ahead, CME FedWatch places the probability of a December rate hike at 68%, while a Reuters poll revealed that 100 of 100 surveyed economists expect a rate increase in December. On Thursday, the Fed's preferred inflation metric—the PCE price index—is projected to show a 3.7% year-over-year increase, up from 3.4% in August. Economic growth for the July-to-September quarter is projected at 3.2%, up from 2.2% in the prior quarter. Meanwhile, the 10-year Treasury yield closed near 5% after reaching 5.33% on October 14, reinforcing macroeconomic pressure as total crypto market capitalization struggles.
Deribit Prepares for $10.97 Billion Options Expiry
Global Central Banks are also active this week. The European Central Bank meets Thursday, with 70 of 73 economists expecting a hold at 2.50%, while the Bank of Japan decides Friday on its 1.25% interest rate.
On Friday at 4 a.m. ET, Deribit will settle $10.97 billion in expiring Bitcoin options, representing 35% of all open Bitcoin contracts on the exchange. Call options currently outnumber puts nearly two to one. The single largest concentration of bets sits at 19,950 BTC targeting a strike price of $95,000, which would require an 18% jump from current price levels. However, Deribit data indicates that the maximum concentration of contracts would expire worthless if Bitcoin falls to $78,000, following recent market movements where Bitcoin dropped below key technical thresholds.
Key Takeaways
- Fed Stance: CME FedWatch projects a 90.6% chance of rates holding at 3.75%–4.00% on Wednesday, but 100% of surveyed economists expect a hike in December.
- PCE Inflation: Expected to rise to 3.7% YoY on Thursday, up from 3.4% in August.
- Record Expiry: $10.97 billion in BTC options expire Friday at 4 a.m. ET, covering 35% of Deribit's open interest.
- Key Strike Levels: The largest call option cluster targets $95,000 (19,950 BTC), while maximum pain sits near $78,000.
Why It Matters
The convergence of a Federal Reserve decision and the largest Deribit options expiry on the calendar creates a potential liquidity squeeze for digital assets. High Treasury yields near 5% continue to draw capital toward fixed-income safe havens, reducing short-term speculative appetite for crypto assets. With open options interest heavily weighted toward the $78,000 level, market makers may drive price volatility toward that mark ahead of Friday's settlement before focus turns back to December central bank actions.
