Bitcoin traded near $84,490 on Thursday, pulling back from the $87,397 high it touched on Monday, as traders ramped up bets that the Federal Reserve will raise interest rates again as soon as next month. CME's FedWatch tool put the probability of an October hike at roughly 75%, with December odds near 59%.

The retreat follows a rally that carried Bitcoin from the mid-$70,000s to an eight-month high in under a week, leaving leveraged positions exposed to a sharp reversal. Inflation concerns have driven the shift in expectations, with markets rapidly repricing the likelihood of additional tightening before the end of the year.

A rate hike raises borrowing costs across the economy and typically strengthens the dollar while lifting returns on cash and government bonds. That makes non-yielding, volatile assets such as Bitcoin less attractive by comparison. Higher rates also tend to squeeze market liquidity and raise the cost of leveraged trading—two dynamics that have historically weighed on crypto prices during tightening cycles.

Wednesday's move was the Fed's first rate hike since July 2023, when it lifted the benchmark rate to a range of 5.25%-5.5% before shifting into a cutting cycle the following year. The September 16 increase, approved unanimously in a 12-0 vote, brought the target range to 3.75%-4%.

Fed Chair Kevin Warsh paired the hike with a dot plot—a chart of individual policymakers' rate projections—showing a median rate of just 4.1% through the end of 2027, which traders read as leaving room for only one more move rather than a sustained tightening campaign. That relatively dovish framing sent rate-hike odds tumbling in the days after the meeting, with markets initially treating September's move as a one-and-done.

The calm did not last. Odds of another hike before year-end—even as soon as October—climbed to 68.5% on Myriad Markets, the predictions platform built by Decrypt's parent company Dastan, while CME's FedWatch tool now puts the chance of a 25-basis-point (one-quarter-percentage-point) October move at roughly 75%, up sharply from where it stood immediately after the September decision.

Fresh catalysts reinforced the repricing. Fed Governor Michael Barr said Wednesday that further policy adjustments are likely needed to bring inflation back to target, and an S&P Global report released the same day showed inflation running at its highest level in nearly four years. Core PCE, the Fed's preferred inflation gauge, sits at 3.4%, well above the 2% target, giving policymakers a data-driven case for tightening again as soon as the October 27-28 meeting.

A Cooling Market

Most of the top 10 cryptocurrencies cooled alongside Bitcoin. Ethereum added just 1.42% over 24 hours to trade near $2,689, XRP was essentially flat at $1.52, and privacy-focused Zcash dropped 2.5% to $1,527.57—though that came after a remarkable run that has seen ZEC climb more than 2,700% over the past year. Hyperliquid slipped 0.37% to $93.04, giving back part of its recent advance as traders locked in gains.

BNB and Solana were the exceptions. BNB rose 2.75% to $781.33, extending a move that took it past $790 this week for an 11% weekly gain after Binance's $100 million purchase of Circle shares tied the exchange into five years of USDC growth. Solana climbed 2.31% to $116.08, building on a run to a nine-month high above $117 last week.

Both tokens have also attracted institutional signals that Bitcoin and Ethereum have not—at least for now. Grayscale's Smart Contract Fund assigned BNB a 30.6% weighting in its latest quarterly rebalance, edging out Ethereum's 29.47% and Solana's 29.15% to make BNB the's largest holding. Solana, meanwhile, drew fresh demand after ZetaChain token holders voted 99.4% in favor of migrating the project's token and AI app onto the Solana network.

Flows, Liquidations, and Sentiment

Despite the pullback, demand for Bitcoin exposure through exchange-traded funds remained strong. Spot Bitcoin ETFs, which hold the asset directly and trade on traditional brokerages, pulled in $998.9 million on Monday alone, their biggest single-day haul in 11 months, and net 2026 flows into the funds turned positive for the first time this year at roughly $320 million.

Derivatives markets told a different story. Data showed $348.33 million in crypto liquidations—forced closures of leveraged positions that can no longer meet margin requirements—over 24 hours, with $270.89 million hitting long positions—after last week's short squeeze left leveraged bulls exposed to the reversal—versus $77.43 million on the short side.

Total crypto market capitalization stood at $2.93 trillion, down about 2.5% from the $3 trillion level it touched during last week's rally. The Crypto Fear and Greed Index read 73 on its 0-100 scale, still in "greed" territory despite the cooldown, while the Altcoin Season Index sat at 51—roughly the midpoint between a Bitcoin-led market and one in which altcoins broadly outperform.

Traders' next checkpoint arrives October 28, when the Fed announces its next rate decision.