Executive Summary
The digital asset market is currently navigating a period of recalibration, characterized by the conflict between short-term macroeconomic pressures and the continued maturation of the ecosystem’s long-term foundations. Over the last 24 hours, the U.S. Federal Reserve’s decision to cut interest rates was accompanied by hawkish forward guidance, triggering a “sell-the-news” reaction across risk assets. Bitcoin’s price fell as markets reassessed the likelihood of further monetary easing. This was compounded by a significant data-driven reversal in capital flows, with U.S. spot Bitcoin ETFs experiencing their largest single-day net outflow in two weeks.
This near-term price fragility contrasts sharply with ongoing fundamental and structural advancements. On-chain signals present a divergent picture: Glassnode analysis suggests a market “lacking conviction” as key support levels are tested, whereas CryptoQuant data indicates that subdued profit-taking could signal room for the prior rally to resume. On the technology front, the mainnet activation of the Stacks Nakamoto upgrade represents a significant improvement for a key Bitcoin Layer-2 network, even as data shows a year-long contraction in the capacity of the payments-focused Lightning Network. Simultaneously, institutional integration deepens, highlighted by Morgan Stanley expanding crypto access to all its wealth clients and Fidelity advancing its staked Solana ETF. The central theme is the pronounced tension between immediate market volatility, driven by macroeconomic forces, and the strengthening of the long-term investment thesis for digital assets.
Price & Market Analysis (Last 24 Hours)
Price Action: The “Sell-the-News” Reaction to the FOMC Decision
Bitcoin’s price was dictated by the market’s response to the U.S. Federal Reserve’s policy announcement. The price, which had been trading near an intraday high of approximately $113,700, experienced a sell-off following the announcement. This broke key support levels, establishing a low near $109,000 before stabilizing. At the time of this report, Bitcoin is trading around $109,400.
This price movement is a classic “sell-the-news” event. The 25-basis-point rate cut was widely anticipated and priced in. However, Federal Reserve Chair Jerome Powell’s cautious and non-committal forward guidance surprised market participants who had positioned for a more dovish stance. The subsequent deleveraging led to over $700 million in liquidations across the broader cryptocurrency market, affecting more than 151,000 traders and indicating a significant buildup of leverage ahead of the event.
Capital Flows: Analyzing the Sharp Reversal in Spot ETF Outflows
The macro-driven price decline was amplified by a reversal in institutional capital flows. On October 29, U.S. spot Bitcoin ETFs recorded a total net outflow of $470 million, the largest single day of withdrawals in two weeks. This brought an end to a brief period of positive inflows that had seen approximately $350 million enter the funds on the preceding Monday and Tuesday.
The outflows were distributed across major products:
• Fidelity (FBTC): $164 million
• ARK Invest (ARKB): $143 million
• BlackRock (IBIT): $88 million
• Grayscale (GBTC): $65 million
In a related data point, the discount to net asset value (NAV) for Grayscale’s new Bitcoin Mini Trust (BTC) was recorded at -0.04%, showing it is trading closely with its underlying assets.
Technical Outlook: Mapping the New Support and Resistance Zones
The recent sell-off has redefined the market’s technical structure. The former support zone between $112,000 and $113,500 has been breached and now acts as overhead resistance. The immediate line of defense for the market is the intraday low of approximately $109,000.
The Macroeconomic Driver: The Federal Reserve’s Hawkish Cut
The FOMC Decision and Powell’s Commentary
The catalyst for market volatility was the Federal Open Market Committee (FOMC) meeting. The committee delivered an expected 25-basis-point rate cut, setting a new target range of 3.75% to 4.00%, and announced the conclusion of its balance sheet reduction program (Quantitative Tightening) effective December 1.
However, the decision was not unanimous, with a divided 10-2 vote signaling internal disagreement. This caution was reinforced by Chair Jerome Powell, who stated that a further rate cut in December is “not a foregone conclusion. Far from it.” He emphasized that policy is “not on a preset course“ as the Fed navigates risks to both its employment and inflation mandates.
Market Interpretation and Impact on Bitcoin
The market interpreted this event as a “hawkish cut,” focusing on the cautious forward guidance rather than the cut itself. In response:
• The probability of a December rate cut, as priced by futures markets, fell from over 90% to approximately 55%.
• A risk-off move was triggered in traditional markets: the U.S. dollar strengthened, the 10-year Treasury yield rose to 4.07%, and major equity indices closed lower.
Bitcoin’s price action correlated with this move, behaving as a risk asset. This demonstrates that its short-term price discovery is increasingly influenced by institutional capital reacting to the outlook for global liquidity. The synchronized response suggests institutional portfolio managers are a significant force in setting Bitcoin’s price, complicating the “inflation hedge” narrative in the short term.
On-Chain Intelligence: A State of Fading Conviction
Glassnode Analysis: “Lacking Conviction”
The latest “Week On-chain” report from Glassnode, titled “Lacking Conviction,” posits that Bitcoin’s inability to hold a price above the Short-Term Holder (STH) cost basis (~$113,000) is a sign of weakening momentum. Key data points include:
• Long-Term Holder (LTH) Behavior: LTHs remain in a state of net distribution, selling approximately 104,000 BTC per month.
• Downside Risk: The report identifies the Active Investors’ Realized Price, near $88,000, as a potential downside target should a deeper correction occur.
CryptoQuant Analysis: A Counter-Signal of Subdued Profit-Taking
In contrast, analysis from CryptoQuant suggests underlying market strength. The firm highlights that the level of net realized profits remains low, even after the rally to a new all-time high, indicating holders are not liquidating positions in large numbers. This is supported by data showing that spending from “OG” holders (wallets older than a decade) is also subdued. CryptoQuant concludes that “a top is still not on the horizon“ and the rally could continue.
Synthesis of On-Chain Signals
The divergent signals reflect a multi-layered market structure. Glassnode’s LTH distribution metric may be capturing selling from specific cohorts, such as 2021-cycle buyers selling near their break-even point. Meanwhile, CryptoQuant’s broader metric may be influenced by new 2025 ETF investors whose high cost basis (~$113,000) means they are not yet in a position to realize significant profits. This masks the distribution from older cohorts, indicating the market requires a granular analysis of different investor groups.
Bitcoin’s Technological Frontier: The Layer-2 Evolution
Stacks’ Nakamoto Upgrade Activates
On October 29, the Stacks network activated its Nakamoto upgrade, a significant hard fork aimed at enhancing Bitcoin’s programmable capabilities. Key features include:
• Fast Blocks: Decouples Stacks block production from Bitcoin’s 10-minute interval, reducing confirmation times to seconds. Post-launch data shows an average block time of 28.9 seconds.
• 100% Bitcoin Finality: Transactions on Stacks now inherit the full security of the Bitcoin mainchain, making them as irreversible as a Bitcoin transaction itself.
• Foundation for sBTC: The upgrade prepares the network for the launch of sBTC, a trust-minimized, Bitcoin-backed asset for smart contracts, anticipated in the next four to six weeks.
Rootstock Network: Post-Upgrade Performance
Following its “PowPeg change” on October 28, the Rootstock network has implemented Segwit support for its bridge, reducing BTC withdrawal (”peg-out”) fees by up to 60%. The network maintains a high level of security through merged mining, with a Rootstock-to-Bitcoin hashrate ratio of 63.21% and a monthly average hashrate of 275.11 EH/s.
The Lightning Network: A Persistent Contraction in Capacity
While programmable layers advance, Bitcoin’s payments-focused Lightning Network has seen a decline in public metrics throughout 2025.
• Total Network Capacity: Down over 30% from its peak to approximately 3,850 BTC.
• Public Channels: Decreased by 50% from a high of over 80,000 to around 41,700.
However, analysis from Fidelity Digital Assets suggests this may be a sign of maturation. While smaller channels are decreasing, the average capacity per channel is increasing. This indicates a consolidation around larger, professionally managed routing hubs, shifting the network from a hobbyist-driven phase to a more professionalized payment infrastructure.
Institutional Adoption & Market Structure
Morgan Stanley Broadens Crypto Access for All Wealth Clients
Effective October 15, Morgan Stanley removed previous restrictions and broadened access to digital asset investments for all of its wealth management clients. Previously limited to high-net-worth individuals with at least $1.5 million in assets, access is now available regardless of account type (including IRAs and 401ks) or risk profile. The firm’s Global Investment Committee has recommended an initial allocation of up to 4%, provided through products from BlackRock and Fidelity.
Fidelity Deepens Altcoin Offerings with Staked Solana ETF Filing
Fidelity is advancing its planned spot Solana ETF (ticker: FSOL) by removing the “delaying amendment” from its S-1 filing, moving it closer to launch. The updated filing reveals a key product feature: the fund intends to stake up to 100% of its underlying SOL holdings to generate additional yield for investors, signaling institutional comfort with crypto-native yield mechanisms following regulatory clarifications from the SEC.
The Systemic Rise of Tether
Tether, the issuer of the USDT stablecoin, now holds $135 billion in U.S. Treasury securities as reserves. This positions the company as the 17th largest holder of U.S. sovereign debt globally, with holdings exceeding those of nations like South Korea and the United Arab Emirates. This accumulation, driven by stablecoin market growth and regulatory frameworks like the GENIUS Act, establishes stablecoin issuers as a new systemic class of buyer for U.S. government debt, integrating the crypto industry into global sovereign financial markets.
The Global Regulatory Chessboard
• United States: Progress on comprehensive crypto regulation has stalled. The CLARITY Act, aimed at defining jurisdiction between the SEC and CFTC, is facing challenges in the Senate, where bipartisan talks have reportedly broken down.
• Europe: Regulatory bodies are actively implementing the Markets in Crypto-Assets (MiCA) regulation. The European Banking Authority (EBA) and European Securities and Markets Authority (ESMA) have recently issued technical standards and guidelines, establishing a clear, pan-European regime.
• Germany: The main opposition party, Alternative for Germany (AfD), has submitted a motion to the Bundestag proposing that Bitcoin be included as a national strategic reserve asset.
• Australia: On October 29, the Australian Securities and Investments Commission (ASIC) updated its guidance (INFO 225), clarifying its view that Bitcoin is “unlikely to be a financial product.” The regulator also issued a no-action letter giving digital asset businesses a transitional period until June 30, 2026, to obtain necessary licenses.
Mining & Network Infrastructure Intelligence
Network Security Strengthens with New Difficulty High
On October 29, the Bitcoin network’s mining difficulty automatically adjusted upward by over 6% to a new all-time high of approximately 155.8 trillion. This adjustment is a direct response to a growing network hashrate, which had caused the average block time to fall to 9.42 minutes, below the 10-minute target. The increase ensures the network’s predictable issuance schedule and robust security.
Corporate Watch: Core Scientific / CoreWeave Merger Vote
On October 30, shareholders will vote on the proposed $9 billion all-stock acquisition of Bitcoin miner Core Scientific (CORZ) by AI cloud provider CoreWeave (CRWV). The deal has faced opposition from proxy advisory firms like ISS and Glass Lewis, which argue that the terms undervalue Core Scientific’s infrastructure assets amid high demand from the AI industry. The vote’s outcome will be a key signal for the valuation of the public mining sector.
Concluding Analysis & Forward Outlook
The market has entered a test phase where short-term, macro-driven headwinds challenge the long-term bullish narrative. The immediate focus is on the market’s ability to defend the $109,000 support level against pressures from a hawkish Federal Reserve and ETF outflows. While long-term fundamentals like the Stacks upgrade and broader institutional access from Morgan Stanley are improving, their ability to provide a demand floor in the current environment is uncertain.
Two key factors will shape the immediate forward outlook:
1. Capital Flows: Daily U.S. spot ETF flow data will serve as a crucial short-term sentiment indicator. Continued outflows would suggest a sustained risk-off posture, while a return to inflows would indicate the recent selling was a specific reaction to the FOMC news.
2. On-Chain Holder Behavior: The response of different investor cohorts to the price drop will be critical. Monitoring whether Long-Term Holders pause their distribution or continue to sell into weakness will provide insight into the market’s underlying conviction.
