Bitcoin and broader cryptocurrency markets enter the Federal Reserve’s October 27–28 meeting with a key question: whether policymakers will reinforce expectations for a prolonged pause or keep the door open for another rate increase before year-end. According to CME FedWatch data, the probability that the central bank will leave its policy rate unchanged in the 3.75%–4.00% range stands at 90.6%, while a 25-basis-point increase to the 4.00%–4.25% range is priced at only 9.4%. No rate cut is expected at this meeting.
The shift in market expectations over the past month has been substantial. On September 25, the odds of an October hike were 64.2%, while the probability of a hold was just 35.8%. The Fed raised rates by 25 basis points at its September meeting in a unanimous decision, noting that economic activity remained robust and inflation stayed high.
Investors will closely watch the post-meeting press conference by Fed Chair Kevin Warsh. Warsh has avoided committing to a particular move ahead of the meeting, while Governor Christopher Waller recently indicated further hikes would likely be necessary if the economy develops as expected, though they do not need to occur at consecutive meetings. A Reuters poll published this week found that nearly all economists expect the Fed to refrain from hiking rates in October before raising them again in December. No new economic forecasts or dot plot will be released, so changes to the decision text, any dissenting votes, and the tone of the press conference will carry additional weight.
Attention is already shifting to the December 9 meeting. CME FedWatch data shows the probability of rates remaining above their current level after that meeting is 74.2%, with a 67.5% chance of the 4.00%–4.25% range and a 6.7% chance of the 4.25%–4.50% range. PIMCO also expects an October hold but believes the next step could be a 25-basis-point hike in December, citing AI investments supporting demand, tariffs, and energy-related inflation risks.
Longer-term fiscal analysis is adding to the debate. The Kobeissi Letter, citing Congressional Budget Office data, argues that if interest rates average 150 basis points above the CBO baseline through 2036, cumulative US deficits could rise by roughly $6 trillion, public debt could reach 133% of GDP, and the annual deficit could climb to 8.8% of GDP. Even a comparatively modest 50-basis-point overshoot could add nearly $2 trillion to deficits and push debt to 124% of GDP. Analysts concluded that the US government effectively needs rate cuts, but the Federal Reserve has little room to deliver them because inflation remains well above the 2% target and elevated energy prices such as oil above $100 are adding another source of price pressure.
For Bitcoin, the October decision itself may be less important than the Fed’s next signal. A pause paired with softer language on future hikes could relieve pressure from high Treasury yields and tight financial conditions, improving appetite for risk assets and giving BTC a potential catalyst after its recent weakness. In contrast, an unexpectedly hawkish message—or a surprise hike—would likely increase the appeal of yield-bearing assets, tighten liquidity, and create a tougher environment for speculative assets such as crypto. The September personal income and spending report, including the Fed’s preferred PCE inflation indicator, is due on Thursday, October 29, and could further shape rate expectations for the coming weeks.
