Bitcoin Leverage Nears $40 Billion Ahead of Federal Reserve Rate Decision

Bitcoin open interest in derivatives has climbed to nearly $40 billion, according to CryptoQuant, as traders increase leveraged positions ahead of this week’s Federal Reserve policy announcement.

Markets broadly expect the central bank to cut interest rates by 0.25 percentage points, following a similar move in September. Softer labor and inflation data have reinforced expectations of a slowdown in U.S. growth, while the ongoing government shutdown has reduced the flow of new economic statistics. The Fed’s statement on Wednesday is expected to outline how it plans to manage monetary policy in these uncertain conditions.

Traders See High Probability of Another Rate Cut

Most investors anticipate another quarter-point rate reduction, extending the Fed’s current easing cycle. The decision follows several months of weaker employment gains and easing inflation pressures.

Limited data from government agencies due to the shutdown has complicated the Fed’s analysis, but Chair Jerome Powell recently signaled flexibility on balance-sheet policy to prevent financial tightening.

On prediction platform Myriad, traders assign a 92% probability to a 25-basis-point cut, reflecting near-unanimous market expectation.

Leverage in Bitcoin Derivatives Climbs

Bitcoin open interest in futures and options contracts has risen to $37.6 billion, up from about $33 billion a week earlier. The increase shows that more traders are taking leveraged bets before the Fed’s decision.

Bitcoin’s price stood near $116,000 on Monday, up from $107,600 last week. While open interest remains below the October 6 high of $47 billion, when Bitcoin touched $126,080, the recent uptick signals renewed activity in the derivatives market rather than a return to speculative extremes.

Analysts Expect Gradual Policy Easing

According to Gracy Chen, CEO of Bitget, markets have already priced in a 25-basis-point cut that would bring the target range to 4.00%–4.25%. She said the Fed’s decision process remains independent of the fiscal situation, suggesting the ongoing government shutdown is unlikely to alter the outcome.

Chen added that Powell may indicate a gradual approach to future rate reductions, keeping liquidity conditions supportive if inflation continues to slow.

Bitcoin Holds Key Support Before Fed Announcement

Chen noted that Bitcoin’s recent rebound is supported by steady inflows into exchange-traded funds and stronger activity in derivatives markets. The cryptocurrency has found short-term support around $112,000, with traders watching the $118,000–$120,000 range as the next key resistance zone.

However, she warned that total leverage near $40 billion could trigger sharp volatility if the Fed adopts a more cautious tone than investors anticipate.

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