Bitcoin Updates: The Fate of Bitcoin Uncertain Amid $7.4 Trillion Fed Liquidity and Global Political Instability

Anticipated interest rate reductions by the U.S. Federal Reserve may release as much as $7.4 trillion from money market funds, potentially driving significant inflows into riskier assets such as

and stocks by 2026, according to a . As returns on short-term securities decrease, institutional investors could increasingly turn to Bitcoin spot ETFs and equities, especially as traditional safe-haven options lose their appeal. BlackRock’s IBIT has already seen $3.5 billion in new investments this month, approaching $100 billion in assets under management, which underscores the rising institutional appetite for cryptocurrencies.

Yet, current market conditions paint a different picture. Both Bitcoin (BTC) and

(ETH) have experienced steep declines recently, with Bitcoin falling below $108,000 and Ethereum dropping under $4,000. On October 20, U.S. crypto ETFs saw outflows of $40.47 million from Bitcoin and $145.68 million from Ethereum as investors reduced leverage amid broader economic uncertainty. Open interest (OI) in Bitcoin futures dropped 23% to $72 billion, while Ethereum’s OI fell 37.3% to $44 billion, reflecting a shift toward risk aversion, as reported by .

Market volatility has intensified due to rising trade tensions between the U.S. and China. The announcement of a potential 100% tariff increase on Chinese goods led to a 19.56% plunge in Bitcoin on October 11, erasing $19 billion in leveraged trades in a single day. Although a temporary agreement was reached, ongoing threats of further trade barriers and rare earth export controls have kept investors wary. Optimism briefly returned after U.S. President Donald Trump revealed plans for a meeting with Chinese President Xi Jinping, which helped Bitcoin recover to $111,000 by October 21. Still, analysts warn in a

, that ongoing geopolitical instability could push below $100,000 before the end of the month.

During this period of turbulence, AI-powered trading platforms such as CoinTech2u have taken advantage of the volatility, earning $1.3 million in profits during the October downturn. The company’s adaptive algorithms responded to the “black swan” event by swiftly modifying trading strategies, highlighting the increasing importance of automation in volatile markets, according to a

. At the same time, HIVE Digital Technologies’ 100MW hydro-powered Bitcoin mining expansion in Paraguay has strengthened its reputation as a regional leader in green energy, though its shares have dropped 21% over the past week despite operational achievements, as noted in a .

The Federal Reserve’s expected rate cut on October 29, likely lowering the benchmark by 25 basis points, could further split the market. While long-term investors see this as a positive for Bitcoin, possibly driving prices toward $200,000, short-term instability remains a concern. “The market has already factored in the cut, but the actual announcement could prompt a ‘sell the news’ reaction,” said Geoff Kendrick of Standard Chartered, as cited in a

.

With trade talks and Federal Reserve decisions still in the spotlight, the future direction of Bitcoin and equities will depend on how macroeconomic uncertainties are resolved. As $7.39 trillion in money market funds stand ready for redeployment, the next few months could reshape the risk asset landscape, though significant geopolitical and regulatory challenges persist.