Bitcoin Pulls Back from $116K Peak as FOMC and Dollar Dynamics Take Centre Stage

Bitcoin briefly touched the US $116,000 mark before cooling off ahead of this week’s Federal Reserve policy meeting. With the U.S. dollar regaining strength, traders are reassessing whether Bitcoin’s rally has more room to run or if a macro correction is brewing.

💹 Market Snapshot — Consolidation After the Highs

Bitcoin surged to approximately US $116,400 on October 27 before facing selling pressure as macro caution returned to global markets.
According to data from KuCoin daily report, BTC’s pullback was accompanied by a modest rebound in the DXY (U.S. Dollar Index) and an uptick in Treasury yields — two traditional headwinds for risk assets.

The Fear & Greed Index, which spiked from “extreme fear” (23) to a neutral 50 this week, reflects renewed uncertainty among traders after a short-lived euphoria.

“We’re seeing a classic pre-FOMC repositioning,” analysts said. “Crypto markets are waiting for clarity on interest-rate language — whether it signals a pause or tightening bias.”

🏦 Macro Crosswinds — Dollar Strength and Policy Uncertainty

The interplay between Bitcoin and the U.S. dollar has resurfaced as a defining market theme.
When the dollar strengthens, leveraged traders often unwind positions in crypto to manage risk exposure, particularly on perpetual-futures exchanges.

This dynamic was also highlighted in our previous Market Analysis, where liquidity migration toward dollar-denominated safe assets was seen as a recurring drag on BTC performance during policy-tightening cycles.

If the Fed signals any continuation of restrictive policy, short-term volatility could expand — yet the broader structure still points to resilience, as institutional inflows via spot ETFs continue to stabilize liquidity (see our earlier coverage Bitcoin & Ethereum ETFs Catch Fire — $283 M Inflows Signal Institutional Commitment).

📊 Technical Setup — Support and Resistance Zones

Technically, Bitcoin now trades in a consolidation band between US $112,800 and $116,000, with traders watching for a decisive break in either direction.
Momentum oscillators (RSI ~58) suggest neither overbought nor oversold conditions, leaving room for macro headlines to dictate the next move.

Whale-wallet on-chain data from Glassnode shows reduced exchange deposits, indicating that long-term holders are not selling into this pullback — a sign that the correction may be driven primarily by derivatives repositioning rather than fundamental weakness.

🌎 Broader Implications — Bitcoin’s Role as Macro Barometer

Bitcoin’s price sensitivity to macro variables underscores its maturing role as a global liquidity barometer rather than a purely speculative asset.
As traditional investors hedge against fiat instability, Bitcoin’s correlation with equity indices and the DXY will likely define its short-term narrative.

The bigger question for Q4 2025: Will Bitcoin evolve into a beneficiary of an eventual “policy-pivot trade,” or will dollar dominance keep sidelining risk appetite?

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