Liquidity Dries Up With Bitcoin Hovering at $113K; Traders Shift Defensive Pre-Fed

Bitcoin Steadies Near $113K as Market Liquidity Shrinks Ahead of Fed Decision

October 29, 2025 — Bitcoin (BTC) hovered near $113,000 on Wednesday as traders adopted a cautious stance before this week’s Federal Open Market Committee (FOMC) meeting, with liquidity thinning across exchanges and a firmer dollar weighing on sentiment.

The world’s largest cryptocurrency has gained 4.5% over the past week but eased 0.7% in the last 24 hours, moving in line with modest declines across the broader market. Ether (ETH) traded around $4,028, down 1.4%, while Solana (SOL) and Binance Coin (BNB) each lost about 2%. XRP, meanwhile, extended its recent strength, holding just above $2.62.

Markets are now focused on the FOMC’s Oct. 28–29 policy meeting, where the Fed is widely expected to cut interest rates by 25 basis points, setting a new range of 4.00%–4.25%.

“Macroeconomic shifts remain the key driver of this crypto cycle,” said Thomas Perfumo, Global Economist at Kraken. “A 25bps cut is nearly certain, but the October 10 sell-off highlighted how quickly crypto reacts to broader market shocks.”

Perfumo noted that institutional capital has remained engaged, though short-term momentum has softened. “Demand from corporate treasuries such as MicroStrategy is moderating, yet ETF inflows remain positive, underscoring crypto’s growing foothold within traditional finance,” he said.

Tightening Liquidity and Macro Jitters

Market depth across major centralized exchanges (CEXs) has dropped sharply in recent sessions, with traders citing a combination of U.S. regional bank stress and persistent macro uncertainty.

“Liquidity is tightening again,” said Alice Li, Partner at Foresight Ventures. “Regional bank fragility could push the Fed to pause quantitative tightening sooner, but sticky inflation still keeps policymakers cautious. That tension is keeping traders defensive.”

Li added that exchange-linked tokens, led by BNB, have stabilized after weeks of deleveraging, while speculative altcoins remain event-driven and low conviction.

Despite the subdued tone, analysts say the market is gradually stabilizing after the October 10 liquidation, which erased nearly $1.2 billion in leveraged positions. The total crypto market cap stands near $3.9 trillion, comfortably above key moving averages.

“Bitcoin’s technical structure is still constructive,” said Alex Kuptsikevich, Analyst at FxPro. “BTC remains above both its 50- and 200-day moving averages. Resistance lies near $117K–$120K, while the rebound from $108K keeps the broader uptrend intact.”

With liquidity thinning and leveraged positioning slowly rebuilding, analysts expect heightened volatility around Wednesday’s Fed announcement — particularly if Chair Jerome Powell signals a slower path toward future cuts or emphasizes inflation risks.