Crypto Markets Recover Slightly as Fed Signals Rate Cut, End of QT

Crypto markets climbed slightly higher to start the week, with total market cap up 2%, and almost all of the top-10 assets in the green on Monday, Oct. 20. The moderate recovery comes after Fed Chair Jerome Powell hinted that the Fed might soon stop reducing its balance sheet, signaling a possible end to its quantitative tightening program.

Bitcoin (BTC) bounced back from last Friday’s brief dip below $105,000, and is now trading around $111,500, up nearly 3% on the day — the second-biggest daily gainer among the top-10 large caps.

XRP saw the most gains among the top-10 in the past 24 hours, surging over 3% to $2.47.

Ethereum (ETH) is changing hands at $4,035, up a more moderate 1.4% on the day. Meanwhile, Dogecoin (DOGE), Solana (SOL), and TRON (TRX) are all up around 1-2%, while BNB stands out as the only top-10 asset slightly in the red today, trading around $1,116.

Top Gainers and Losers

Within the top-100 crypto assets by market cap, Zcash (ZEC) and Chainlink (LINK) posted the biggest daily gains. ZEC jumped more than 16% amid continued interest in privacy tokens, while LINK is up 8% ahead of a Federal Reserve conference on payment innovation scheduled for Tuesday, Oct. 21, which will include representatives from Chainlink, Fireblocks, Coinbase, Circle, Paxos, and traditional financial giants such as BlackRock, Ark Invest, and others.

Meanwhile, today’s biggest losers among the top-100 are Ethena’s ENA and Bitfinex’s LEO token, which are both down about 5%.

Analysts at Coinbase Institutional noted in their “Charting Crypto Q4 2025: Navigating Uncertainty” report from Oct. 16 that they have a “cautiously optimistic stance” for Q4. The analysts said they believe that the crypto bull market “has room to run,” though they admitted they’re now more cautious after the market wiped out around $20 billion on Oct. 10, the largest single-day liquidation event the industry has seen to date.

“Heading into Q4, we had a constructive outlook on crypto markets, but the leverage flush on October 10 has led us to urge some caution,” the analysts wrote.

ETFs Bleed, amid ‘Wild Card’ Macro Conditions

In the past 24 hours, over $434.9 million in leveraged positions were liquidated, with $248 million in shorts, according to Coinglass. ETH led the wipeout with over $146 million liquidated, followed by BTC at $139 million and ENA with more than $35 million liquidated mostly in long positions.

Last week, spot ETH ETFs saw over $311 million in net outflows, according to SoSoValue. Spot Bitcoin ETFs recorded over $1.23 billion in net outflows over the same timeframe, the largest weekly outflow since February.

On the macro side, Fed Chair Powell indicated that the U.S. central bank will soon wrap up its balance sheet reduction program, better known as quantitative tightening. Many expect this long-running program to end soon, with a survey of big banks predicting a January 2026 finish, Reuters reported last week.

Speaking with The Defiant, Shawn Young, chief analyst of MEXC Research, said that macro conditions remain the “key wild card to watch out for in the current market landscape.” Young explained:

Meanwhile, Reuters reported today that the Fed is expected to cut rates another 25 bps at its next policy meeting, which is scheduled for Oct. 28-29. However, the ongoing government shutdown continues to delay the release of fresh economic data.

Coinbase’s analysts noted in their report last week that they expect the Fed to impose two more rate cuts this quarter, which may “incentivize investors to put to work some of the $7 trillion that is currently parked in money market funds.”