Bitcoin Leverage Nears $40B Ahead of Fed Rate Cut Decision

Bitcoin's price has surged past $116,000, accompanied by a sharp rise in open interest in Bitcoin derivatives to nearly $40 billion, as traders position themselves ahead of the Federal Reserve's anticipated quarter-point rate cut. Markets overwhelmingly expect the Fed to lower rates to the 4.00-4.25% range, a move seen as supportive for risk assets like Bitcoin amid slowing inflation and a cooling labor market. Fed Chair Jerome Powell's hints at ending quantitative tightening and possibly initiating a gradual easing cycle have bolstered optimism, potentially pushing Bitcoin toward $118,000 to $120,000 by month-end. However, analysts warn that the high leverage levels increase the risk of volatility and sharp market swings. The ongoing U.S. government shutdown has intensified focus on the Fed's decision due to reduced economic data availability, while positive signals from U.S.–China trade negotiations have also lifted investor sentiment. Overall, the market's bullish momentum reflects broad expectations of monetary easing and renewed liquidity, though caution remains about leverage-driven risks.