Bitcoin Core is under fresh scrutiny after developers disclosed three vulnerabilities on October 28, just hours after the Federal Reserve held interest rates steady. The disclosures followed AI-assisted security research by Project Loupe and arrived as Bitcoin holders focused on Friday's roughly $12 billion options expiry, a settlement event now sharing the calendar with the security news.

BREAKING: Three new Bitcoin Core vulnerabilities discovered including a bug allowing attackers to remotely brick nodes. The vulnerabilities include two medium-severity flaws that could allow malicious peers to exhaust node memory and a third that could corrupt blockchain undo… pic.twitter.com/oOx2rrK8xe

— Rod Palmer (@rodpalmerhodl) October 28, 2026

The vulnerabilities affect Bitcoin Core, the software used by nodes to verify transactions and enforce Bitcoin's consensus rules. One flaw could allow malicious peers to crash nodes running Windows, macOS, and BSD. A second could gradually exhaust memory on affected machines, while a third could corrupt blockchain undo data under extreme conditions. For node operators, the practical exposure is availability: a crashed or memory-degraded node stops doing that verification work until it is restarted or repaired, removing that operator's independent check on the chain.

Bitcoin Core developers have already released fixes across all four maintained release branches — the direct mitigation path for node operators. Even so, the timing puts network security alongside monetary policy and derivatives positioning in an unusually busy week for the asset.

Bitcoin Core Bugs and Node Security

The most serious of the three disclosed issues involves unbounded memory growth through TCP urgent data. A malicious peer could bypass normal memory protections and overwhelm vulnerable nodes running non-Linux operating systems, including Windows, macOS, and BSD. Linux nodes are not affected. The full disclosure is published on Bitcoin Core's official website.

A second vulnerability allows memory usage to grow gradually when a peer pretends to use an older version of the Bitcoin protocol. The attacker can exploit weaknesses in message queuing and connection handling to keep accumulating data over time. Bitcoin Core estimates growth of up to 2 MB per hour per inbound peer and 5 MB per hour per outbound peer.

The third issue concerns oversized undo files, which store the information needed to disconnect blocks during chain reorganizations. Under extreme conditions, a miner could create valid blocks that push an undo file beyond 4 GB in size. The resulting corruption could cause affected nodes to shut down during specific reorganizations. The fix covers 64-bit systems, but 32-bit systems and nodes using FAT32 storage remain affected.

All three vulnerabilities were classified as easily discoverable through relatively simple methods, including large language model prompts. Project Loupe, led by Elias Rohrer at Spiral, identified the issues through automated AI scanning. Bitcoin Core's updated security disclosure policy accelerates publication when fixes are already available for vulnerabilities considered easy to find — a threshold these disclosures met. The episode also illustrates a broader shift in open-source security work: automated AI scanning can surface several distinct bugs in a single pass, tightening the timeline from discovery to published fix.

Fed Holds Rates as Bitcoin Options Expiry Approaches

The Federal Reserve maintained its benchmark interest rate at 3.75%–4.00% on October 28. The decision was not unanimous, with Lisa Cook and Beth Hammack favoring a 25-basis-point increase instead. The official FOMC statement also described economic activity as expanding at a strong pace while inflation remained elevated. The split vote highlights differing views inside the committee over how to respond to still-elevated inflation.

Read Chairman Warsh's full opening statement from the #FOMC press conference (PDF): pic.twitter.com/1SUkOfaU0T

— Federal Reserve (@federalreserve) October 28, 2026

The decision leaves markets weighing persistent inflation against the outlook for monetary policy. Higher interest rates can pressure risk assets such as Bitcoin by increasing financing costs and making yield-bearing alternatives more attractive. Bitcoin's near-term reaction will also depend on positioning, liquidity, and expectations surrounding future Fed decisions.

Meanwhile, around $12 billion in Bitcoin options are scheduled to expire on Friday. Derivatives estimates put the notional value at approximately $12.4 billion, a concentration that makes the settlement a major event for short-term positioning. Traders will watch the balance between calls and puts, alongside key strike prices, as the contracts settle. With the Fed decision now delivered, the expiry is the next fixed point on the calendar for short-term traders.

Options expiry does not automatically trigger a rally or a sell-off. However, large concentrations of open interest can influence hedging activity and amplify price movements when market conditions shift. Combined with the uncertainty left by the Fed decision, the expiry gives traders another reason to monitor volatility closely into the end of the week.

Despite these near-term pressures, Bitwise Chief Investment Officer Matt Hougan has raised his long-term Bitcoin price target to $1.6 million by 2036. His latest investment outlook points to growing store-of-value demand and a larger potential institutional investment market as the main drivers. Hougan's forecast assumes Bitcoin captures a greater share of these expanding markets over the next decade.