Crypto Markets Brace for Fed Decision as Traders Shift Toward a December Rate Hike

The Federal Reserve is widely expected to keep its benchmark interest rate within the 3.75%–4.00% range when its two-day meeting concludes on Wednesday, October 28. Officials are weighing persistent inflation against a cooling labor market just six days before the U.S. midterm elections. Polymarket traders currently assign a 94.9% probability to a rate hold ahead of the 2 p.m. ET announcement.

While the outcome of the October meeting appears largely settled, expectations for December remain less certain. Prediction markets indicate a 79% chance of another rate increase next month, putting Chair Kevin Warsh’s 2:30 p.m. press conference under close scrutiny from cryptocurrency traders.

Bitcoin is trading near $81,430, representing a 1.9% gain over the past 24 hours.

Polymarket’s October Fed decision market has attracted $86 million in wagers. The most likely scenario for the next three meetings, carrying a 59% probability, involves no change in October, a rate increase in December, and another hold in January. The December estimate combines contracts covering increases of 25 and 50 basis points.

Bond markets are also signaling expectations of further tightening. The two-year U.S. Treasury yield reached 4.68% on Monday, 68 basis points above the upper limit of the Fed’s target range. That compares with 4.17% in late August, suggesting investors are preparing for the possibility of additional rate increases.

What Are Traders Expecting From Warsh?

Markets are anticipating a hawkish hold, in which the Fed leaves interest rates unchanged but signals that further increases remain possible.

Economic conditions continue to present conflicting signals. Annual consumer inflation accelerated to 3.7% in September from 3.4% in August, while Brent crude traded near $111 per barrel. Meanwhile, U.S. employers added only 29,000 jobs in September, and the unemployment rate increased to 4.2%.

The Fed raised rates by 25 basis points on September 16 in a unanimous 12–0 decision. Its statement emphasized that inflation remained elevated and reiterated its commitment to price stability. Since taking over as chair, Warsh has generally avoided offering explicit forward guidance, stating that he does not “prejudge meetings.”

The number of dissenting votes will be another key indicator. Cleveland Fed President Beth Hammack, Dallas Fed President Lorie Logan, and Minneapolis Fed President Neel Kashkari supported a rate increase in July, while the rest of the committee favored holding rates steady.

Polymarket gives two dissenting votes the highest probability at 33.5%. Three dissents follow at 28%, while a unanimous decision has a 23% probability. Matt Weller of FOREX.com describes two or more dissents as a “true hawkish hold.” A decision without dissenting votes could weaken expectations of a December hike.

The approaching midterm elections add a political consideration. SMBC chief economist Joseph LaVorgna said before the meeting that the Fed would be reluctant to provoke the White House just six days before the election.

The leading scenario is an unchanged policy rate accompanied by two hawkish dissents, continued warnings about inflation, and a press conference in which Warsh leaves a December increase possible without making a firm commitment. Such an outcome could keep market expectations for a hike around the current 73%–79% range.

A more dovish outcome represents the main risk to this outlook. If the decision receives unanimous support or Warsh argues that 10-year Treasury yields near 5% are already sufficiently restrictive, traders could reduce their expectations for another rate increase.

How Could the Fed Decision Affect Crypto?

Bitcoin’s reaction to previous Fed decisions in 2026 suggests that policymakers’ messaging may have a greater influence on prices than the rate decision itself.

BTC declined within 24 hours of three of the five rate holds this year, with an average loss of 2.6% across all five meetings. The largest declines followed the January and June decisions, when Bitcoin dropped 6.2% and 5.1%, respectively.

The September 16 rate increase led to a different outcome. Bitcoin gained 1.1% over the following 24 hours and climbed 11.3% during the next week as uncertainty surrounding the decision eased.

Options markets currently point to relatively subdued volatility expectations. Deribit’s DVOL index, which tracks the 30-day implied volatility of Bitcoin options, stood at 37.3 on Wednesday and has remained between approximately 37 and 39 over the past two weeks.

Despite this relatively stable reading, an unexpected message from Warsh could trigger a significant market reaction.

A firm signal that another rate increase is likely in December could push Treasury yields and the U.S. dollar higher, creating potential headwinds for Bitcoin. A more accommodative tone could ease those pressures and support BTC and other digital assets.

Investors will also be watching several upcoming economic and market events. September’s personal consumption expenditures (PCE) inflation report and third-quarter GDP figures are scheduled for Thursday. Deribit’s monthly options contracts expire on Friday, followed by the U.S. midterm elections on November 3.

Bitcoin Price Analysis: Can BTC Recover $83,624 After the Fed Meeting?

Bitcoin remains above its major moving averages but has yet to reclaim its October opening price. The Fed’s guidance could determine whether the cryptocurrency extends its recovery or faces renewed selling pressure.

BTC is trading around $81,430 on Binance, above its 50-day exponential moving average (EMA) at $80,829 and its 200-day EMA at $76,442. These levels could act as support if prices move lower.

Resistance: $83