Bitcoin Tests $110K as Traders Sell the News on Fed Cut and U.S.-China Deal
Bitcoin’s Rally Hits a Pause
Bitcoin is testing a crucial support level around $110,000 this week as global markets digest the Federal Reserve’s interest rate cut and the latest trade developments between the United States and China. After an initial surge of optimism that lower rates would boost liquidity, traders turned cautious, selling the news and locking in profits.
The world’s largest cryptocurrency slipped around 2.5 percent overnight, with Ethereum, Solana, and other major coins following a similar trajectory. The move highlights a growing pattern in crypto markets: optimism ahead of central bank decisions followed by sharp corrections once the news becomes reality.
Market analysts point out that while lower interest rates typically support risk assets, the tone of Fed Chair Jerome Powell’s press conference shifted sentiment. Powell hinted that further cuts were not guaranteed, suggesting the central bank remains data-dependent and wary of inflation risks.
Macro Forces Still Driving Crypto
The crypto market is behaving increasingly like a mirror of the global macroeconomy. A few years ago, Bitcoin moved mostly on crypto-specific news like regulatory crackdowns or exchange hacks. Now, it trades in tandem with equity indices and bond yields.
The recent rate cut prompted immediate selling across major U.S. indices, a trend that also affected cryptocurrency. The correlation between Bitcoin and the Nasdaq remains near historical highs, showing how digital assets are still treated as risk assets in times of uncertainty.
This new reality for investors means that monitoring economic data releases like inflation, employment, and GDP reports is now just as crucial as monitoring blockchain metrics or tracking whale movements.
U.S.–China Deal Offers Hope but No Immediate Lift
The U.S.–China trade deal, announced alongside the rate cut, added a fresh variable to market psychology. Traders anticipated that the easing of geopolitical tensions would boost risk appetite, but the response was not as strong as expected.
The agreement, aimed at reducing tariffs and encouraging technology exchange, may support long-term global growth, but short-term traders appear unconvinced. The crypto market briefly spiked in the headlines before reversing course within hours.
According to analysts at CoinDesk Research, “The deal reduces long-term uncertainty but does not inject immediate liquidity into crypto markets. Traders are still waiting for concrete economic effects rather than political gestures.”
Institutional Money Takes a Step Back
Data from on-chain analytics platforms show that institutional inflows into Bitcoin exchange-traded funds slowed following the announcement. While ETF volumes remain strong compared with early 2025, the pace of inflows dropped by about 15 percent week over week.
Large holders known as “whales” also trimmed positions, possibly anticipating another round of volatility. Some analysts argue this is a healthy development, describing it as market consolidation after a powerful multi-month rally.
Retail traders, however, appear to be buying the dip. Google Trends shows rising searches for “buy Bitcoin after the Fed cut” and “is Bitcoin cheap now,” suggesting renewed retail interest at lower price levels.
Liquidity and Volatility in Focus
Market liquidity remains uneven. Data from several exchanges reveal thinner order books compared to September, meaning even modest sell orders can trigger noticeable price swings.
Volatility indexes for Bitcoin and Ethereum rose sharply after Powell’s comments, with Bitcoin’s 30-day volatility reaching its highest level since early 2024. For traders, that means opportunity but also risk.
Wider trading ranges can benefit short-term speculators, but they also remind long-term investors of the importance of patience and disciplined risk management.
Why Traders Sold the News
The “sell-the-news” reaction has become a recurring feature in crypto markets. Leading up to major events, speculative traders often build leveraged long positions, expecting positive outcomes. When those outcomes occur, prices sometimes drop because there is simply no one left to buy.
The same dynamic unfolded this week. The rate cut was widely expected, and traders had already priced in optimism weeks before. When the news hit, it served as a cue for profit-taking rather than celebration.
In addition, Powell’s cautious remarks introduced a layer of doubt. Investors had hoped for a signal of further easing, but the Fed’s message was one of patience. That subtle shift in tone was enough to spark selling across both equities and crypto.
Bitcoin’s Technical Landscape
Technically, Bitcoin remains in a broad uptrend, but it is testing an important psychological level at $110,000. Analysts identify $108,500 as immediate support and $115,000 as near-term resistance.
If Bitcoin breaks below $108,000, traders warn of a potential correction toward $103,000. Conversely, a strong close above $115,000 could trigger momentum buying that sends prices toward $120,000.
Ethereum trades around $4,100 with support near $3,950. Solana and Avalanche have also found temporary stability, though both remain vulnerable to renewed selling pressure if Bitcoin weakens further.
On-Chain Data Suggests Holding Behavior
Despite price weakness, on-chain metrics reveal a surprisingly resilient investor base. Long-term holders continue to accumulate coins, and exchange balances of Bitcoin have fallen to multi-year lows.
This suggests many investors are taking coins off exchanges into cold storage, a common strategy when expecting longer-term gains. Analysts view this as a bullish sign because it reduces potential sell pressure in the short run.
Network activity remains strong. Daily active addresses on the Bitcoin blockchain have increased slightly since mid-October, and transaction fees remain elevated, signalling ongoing use rather than panic.
The Role of Stablecoins and Market Liquidity
Stablecoins remain critical for providing liquidity to crypto markets. Following the Fed announcement, Tether’s market capitalisation saw a minor expansion, suggesting that traders moved to USDT as a temporary shelter from volatility.
This pattern reflects a more sophisticated market compared to previous cycles. Rather than exiting crypto entirely, traders increasingly rotate between Bitcoin, Ethereum, and stablecoins depending on market mood.
Experts predict that as traditional financial institutions expand their on-chain presence, liquidity will deepen, and price swings will gradually moderate. For now, however, volatility is still a defining feature of the crypto landscape.
Regulatory Outlook
Regulation remains a backdrop that could either calm or destabilise markets. In Washington, discussions about clearer tax reporting rules for digital assets continue, while Europe is finalising the implementation of MiCA's comprehensive crypto framework.
Analysts believe that transparent regulation could ultimately attract more institutional money, but uncertainty in the short term keeps many large investors on the sidelines.
In Asia, Hong Kong and Singapore continue positioning themselves as friendly jurisdictions for digital finance, a move that may capture some of the liquidity migrating from less predictable markets.
Sentiment Across Social Platforms
Social sentiment turned cautious this week. Mentions of “Bitcoin dip” and “Fed cut impact” spiked on X and Reddit, reflecting both anxiety and curiosity among retail investors.
Millions of followers split among influencers, with some advocating for a deeper correction and others urging patience. Analysts at Santiment report that historically, such mixed sentiment often precedes a period of sideways consolidation before the next major move.
Lessons for Traders and Beginners
For newcomers, the current market conditions offer valuable lessons. The main takeaway is that macro factors now drive crypto. Understanding how interest rates, inflation, and central bank decisions influence liquidity will be key to successful investing.
Another crucial insight is the danger of leverage. The recent corrections wiped out millions of dollars in leveraged positions within hours. Beginners should focus on spot trading and proper risk management rather than chasing quick gains.
Diversification also matters. While Bitcoin remains the safest and most liquid crypto asset, diversification into projects with strong fundamentals such as Ethereum or Solana can reduce portfolio volatility over time.
Longer-Term Outlook
Despite the short-term sell-off, most analysts remain positive about Bitcoin’s trajectory over the next 12 months. The upcoming 2026 halving event, expected to cut Bitcoin’s supply issuance by half, could serve as a major bullish catalyst.
Institutional adoption continues to expand quietly. Major payment networks and investment banks are integrating blockchain settlement systems, and nation-states are exploring Bitcoin reserves as part of broader digital-asset strategies.
The combination of scarcity, utility, and growing regulatory clarity underpins the argument that Bitcoin remains in a secular bull market, even if short-term corrections test investor nerves.
Bitcoin’s test of the $110,000 level marks a pivotal moment for the crypto market. Traders are learning that liquidity and sentiment can shift instantly based on global macro headlines. The Fed’s rate cut and the U.S.–China deal initially inspired optimism but quickly turned into a textbook “sell-the-news” event.
For seasoned traders, volatility creates opportunity. For beginners, it is a reminder that patience and education are essential. The broader narrative remains intact: digital assets are maturing into an integral part of the global financial system, influenced by the same forces that shape traditional markets.
As the dust settles, Bitcoin’s resilience will once again be tested. Whether it bounces or breaks, the lesson is clear: in crypto, every headline is both a challenge and a chance to learn.