Fed Rate Decision, Inflation Data, and Bitcoin Options Expiry Define Week

The coming week may determine the value of equities, bitcoin (BTC), and the US dollar heading into the holiday season. Between Wednesday and Friday, the Fed convenes, inflation figures are released, and $11 billion worth of bitcoin options are set to expire.

Four weeks ago, market participants considered a rate increase this week probable. Currently, the probability stands at less than 10%. Still, few on Wall Street believe the central bank has finished tightening.

Why Does a Likely Fed Pause Still Matter for December?

The Fed increased borrowing costs in September, its first such move since 2023. That decision brought the benchmark rate to a range of 3.75% to 4.00%.

The rate influences nearly every aspect of consumer finance. It affects the cost of home loans, auto financing, and credit card debt.

It also directs large capital flows. Higher returns on risk-free savings reduce the appetite for speculative assets like technology shares and digital currencies.

The central bank is anticipated to hold rates steady on Wednesday. According to the CME FedWatch Tool, the probability of no action is 90.6%. One month earlier, a rate increase was the preferred outcome with 64.2% odds.

The outlook for December differs. The CME FedWatch Tool assigns a 68% chance of a rate hike in December. A Reuters poll showed that every one of the 100 economists surveyed anticipates an increase.

Why delay? Yardeni Research cites the political calendar as the reason.

“We believe the committee should hike on Wednesday but won’t because the midterm elections are so close,” the researchers indicated.

US midterm elections take place on November 3. Federal Reserve Chair Kevin Warsh is scheduled to hold a press conference at 2:30 p.m. Eastern Time on Wednesday.

Can Thursday’s Inflation Data Decide Whether Markets Rally or Retreat?

Thursday morning will see the release of the Fed's preferred inflation gauge. The personal consumption expenditures (PCE) price index measures the rate of price increases for US consumer goods and services.

MarketWatch reports that economists forecast an annual increase of 3.7%. The central bank targets 2%. Furthermore, the trend is reversing, rising from 3.4% in August.

Core PCE much cooler than expected, as previewed:

PCE 0.3% MoM, Exp. 0.3%
PCE 3.4% YoY, Exp. 3.7%

PCE Core 0.2% MoM, Exp. 0.3%,
PCE Core 3.0% YoY, Exp. 3.3% https://t.co/vZws3Ik41Q

— zerohedge (@zerohedge) September 30, 2026

Economic growth is not slowing to ease price pressures. Third-quarter GDP is projected at 3.2%, compared with 2.2% in the prior quarter.

Fixed-income markets are signaling concern. According to Mortgage News Daily, the 10-year Treasury yield, which influences mortgage rates, ended the week around 5%. It reached 5.33% on October 14.

A higher inflation reading would reinforce expectations for a December rate increase. A lower figure would diminish them.

Historical precedent highlights the risks. In May and June, bitcoin declined from roughly $82,000 to the low $60,000s when expectations of rate cuts diminished, according to BeInCrypto.

However, a surprising turn occurred. When the Fed did raise rates in September, bitcoin actually increased, jumping from approximately $75,350 to above $76,100 in a matter of minutes.

Are Europe and Japan Adding to the Pressure?

The European Central Bank (ECB) also meets on Thursday. Admiral Markets reports that a Reuters poll showed 70 out of 73 economists predict the ECB will keep its rate at 2.50%. The majority foresee an increase in December.

Reuters Poll: All 100 Economists Expect Fed Rate Hike in December

A Reuters poll found that 94 of 100 economists expect the Federal Reserve to hold interest rates at 3.75%–4.00% at its October m… https://t.co/uaMMeBzh67

— BigBreakingWire (@BigBreakingWire) October 20, 2026

The Bank of Japan (BOJ) announces its decision on Friday. Its current rate of 1.25% is the highest level since 1995.

This decision has global implications. For years, investors have taken advantage of low-cost yen borrowing to purchase overseas assets, including cryptocurrencies. BeInCrypto previously noted that higher rate expectations in Japan could trigger the unwinding of such carry trades.

How Could Friday’s $11 Billion Options Expiry Move Bitcoin?

BeInCrypto data shows bitcoin was trading at $80,472 on Sunday. That is significantly below its early October high of more than $86,000.

Friday follows. At 4:00 a.m. Eastern Time, bitcoin options valued at $10.97 billion are set to expire on the Deribit exchange. These options give holders the right to buy or sell at a predetermined price before a specific date.

This event represents the largest single expiration on Deribit's schedule, accounting for 35% of all outstanding bitcoin contracts on the platform.

Bullish call options outnumber bearish put options by nearly a two-to-one margin.

The largest individual position, totaling roughly 19,950 BTC, is centered on the $95,000 strike price. To reach that level, the current bitcoin price would need to rise approximately 18% within five days.

Deribit's data points to an alternative outcome. At the $78,000 level, the majority of these contracts would expire without value.

By the end of the week, market participants will have greater clarity on December's monetary policy. The Fed is scheduled to meet again on December 8-9, the ECB on December 17, and the BOJ on December 18.

Across all three central banks, market pricing implies a better than 70% chance of a rate increase. This week will determine whether those expectations strengthen or begin to unravel.