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Crypto Markets Face Volatility Amid Fed Uncertainty
Bitcoin (BTCUSD) continued its downward trajectory on Thursday, while altcoins such as Ether (ETHUSD) and Solana (SOLUSD) experienced even steeper declines. Traders anticipating a late-October rally may be disappointed, as Bitcoin now trades below $107,000, marking a 6% drop for the month and a 15% decline from its October 6 record high. Ether and Solana have each fallen roughly 10% in October.
Broader Market Sentiment
The slide in crypto prices reflects a broader risk-off sentiment in financial markets, fueled by uncertainty surrounding the Federal Reserve’s approach to future interest rate cuts. Fed Chair Jerome Powell indicated that another rate reduction in December is “far from” guaranteed, prompting traders to temper expectations.
Vugar Usi Zade, COO at crypto exchange Bitget, told Investopedia, “This prompted traders to scale back expectations.”According to Zade, Bitcoin and Ethereum ETFs listed in the U.S., including Fidelity Wise Origin Bitcoin Trust (FBTC) and ARK 21Shares Bitcoin ETF (ARKB), showed signs of investor caution, collectively recording $550 million in outflows as of October 29.
October’s Earlier Volatility
The current decline follows a Black Friday-like event on October 10, during which more than $19 billion in crypto positions were liquidated. Weeks later, some digital asset treasury companies (DATCOs) began selling crypto from their reserves, just months after acquiring it. These moves further contributed to market volatility.
DATCO Activity and Treasury Sales
ETHZilla (ETHZ), originally a biotech company that pivoted to stockpiling Ether in August, sold approximately $40 million from its treasury to fund share repurchases, according to a Monday disclosure. The company’s CEO stated, “The company planned to continue on that path with the goal of reducing the number of shares available as well as shrinking the gap between its stock price and the net asset value of its underlying holdings.”
Several high-profile DATCOs, including Tom Lee’s BitMine Immersion Technologies (BMNR), Eightco Holdings (ORBS), and SharpLink Gaming (SBET), have seen their shares fall sharply, declining at least 70% from peak levels. As these shares began trading at a discount to their crypto holdings, concerns arose that DATCOs might struggle to continue funding their treasuries, potentially triggering wider market selling.
Market Impact of DATCO Weakness
Despite these concerns, Zade noted that while weakness in DATCOs contributed to localized volatility, there is no evidence they triggered a broader selloff. The market has seen fluctuations in response to both ETF outflows and treasury sales by digital asset companies, yet these movements appear contained rather than systemic.
Implications for Investors and Traders
The current crypto market conditions highlight sensitivity to macroeconomic signals such as interest rate policy from the Federal Reserve. Investor caution is visible in ETF flows and treasury management by DATCOs, which together influence liquidity and short-term price movements.
Zade emphasized that the combination of uncertain monetary policy and DATCO activity has heightened volatility in specific market segments. However, broader crypto market fundamentals remain influenced by demand, adoption, and institutional participation.
Altcoin Performance
Altcoins have mirrored Bitcoin’s weakness. Ether and Solana are both down around 10% for the month, reflecting broader risk-off sentiment. These declines have affected market confidence, especially among traders anticipating gains in late October.
The ongoing volatility demonstrates that while cryptocurrency continues to attract attention from both retail and institutional investors, the market is highly reactive to macroeconomic signals and liquidity dynamics.
