US Federal Reserve cuts rate by 50 bp: Bitcoin breaks through $85,000 amid short squeeze and influx into ETFs
The Federal Open Market Committee (FOMC) of the US Federal Reserve announced a decisive transition to a soft monetary policy, reducing the base interest rate by 50 basis points to the range of 4.75%–5.00% per annum. This decision marked the official start of the global monetary stimulus cycle for the American economy. The reaction of the cryptocurrency market turned out to be swift and powerful: the quotes of the first cryptocurrency overcame resistance and rose above the psychological level of $85,000, completely compensating for the drawdown of the previous week.
Why did the Federal Reserve-decision trigger a massive-$420-million short squeeze?
Most traditional Wall Street analysts had forecast a more conservative 25 bps move, wary of the risks of inflation accelerating again. The aggressive decline of just half a percentage point caught derivatives market participants by surprise, who had been massively opening short positions following the recent delays of the CLARITY Act bill in the Senate. Within four hours of the Fed chairman’s press conference, BTC’s impulse price jump from $77,800 to $85,400 triggered a cascade of forced liquidations of margin short positions on the centralized exchanges Binance, Bybit and OKX totaling more than $420 million, adding further acceleration to the upward candle.
How institutional capital-flows into BlackRock and Fidelity spot ETFs fueled the rally?
The decline in US Treasury yields triggered an immediate rotation of liquidity from risk-free money market instruments towards deflationary digital assets. Over the past trading day, the net inflow of capital into the American spot Bitcoin ETF sector exceeded $650 million. The lion’s share of demand was traditionally accumulated by the iShares Bitcoin Trust (IBIT) from BlackRock and the Wise Origin Bitcoin Trust (FBTC) from Fidelity. Institutional investors view the start of a rate cut cycle as a fundamental catalyst for the weakening of the DXY dollar index and the launch of a new round of sovereign liquidity.
What are the medium-term goals of Bitcoin and altcoins heading into a historic fourth quarter?
From a technical point of view, the confident consolidation of Bitcoin above the level of $82,500 leveled the local downward trend and opened a direct path to testing the zone of absolute historical maximums of $88,000–$90,000. Historically, the fourth quarter (October-December) is the most productive period for the crypto market, demonstrating an average quarterly profitability of over 50% during the halving and post-halving cycles. Following the flagship, leading altcoins showed double-digit growth: Ethereum consolidated above $3,600, and Solana tested the $160 level amid record network activity.
The crypto market isn't just about numbers—it's a complex ecosystem where politics, technology, and economics intertwine. In my news coverage, I strive not merely to recount events, but to analyze their real impact on the market. My goal is to make cryptocurrency news clear, accessible, and objective.
