Bitcoin Briefly Tops $116,000 as Traders Debate Path Toward CME Gap and Fed Rate Decision

Key Points:

• Bitcoin surged to $116,000, gaining 1.6% as traders brace for the Federal Reserve’s rate decision this week.

• Analysts remain split: some eye $117,000 as a pre-Fed peak, while others expect a pullback to the $111,000 CME gap.

• Investor sentiment is upbeat but cautious, with technical indicators hinting at possible short-term exhaustion.

Bitcoin (BTC) surged past $116,000 on Tuesday as volatility spiked ahead of the Federal Reserve’s interest rate decision, rekindling debate among traders about whether the latest rally signals renewed momentum or a prelude to a short-term correction.

The world’s largest cryptocurrency rose 1.6% in early U.S. trading, reaching $116,077 on Bitstamp, according to data from Cointelegraph Markets Pro and TradingView. The move came amid heightened expectations that the Federal Open Market Committee (FOMC) will cut interest rates by 25 basis points on Wednesday — a shift that could inject fresh liquidity into risk assets, including cryptocurrencies.

Market analysts, however, remain divided on whether Bitcoin’s latest push represents sustainable strength or merely a setup for a retracement toward the CME futures gap near $111,000.

Macro Factors Drive Short-Term Volatility

The latest spike reflects a mix of macroeconomic anticipation and speculative positioning ahead of the FOMC meeting. Historically, Bitcoin has shown increased volatility during major U.S. monetary announcements, often whipsawing between local highs and lows as traders reposition.

This time, BTC appears to be defying typical pre-Fed behavior. “So far, so good on Bitcoin. It’s nicely holding up here and doing a slight retest,” said Michaël van de Poppe, a crypto trader and analyst, adding that he expects BTC to “start the uptrend in the remainder of the week.”

Van de Poppe also pointed to a short-term inverse correlation between Bitcoin and gold, noting that the precious metal fell to $3,886 per ounce — its lowest level since early October. “Gold coming down and consolidating is heavily bullish for risk-on assets, including altcoins,” he wrote on X.

CME Futures Gap at $111K: Traders Eye a Possible Retracement

Not all traders share Van de Poppe’s optimism. Market participant Trader Killa highlighted a potential technical gap in the CME Bitcoin futures market near $111,000, suggesting that prices could revisit lower levels before forming a new leg higher.

“Breaking above this blue barrier is going to be a challenge,” he wrote. “That said, we have a high chance of re-visiting 111.2K.”

The so-called CME gap phenomenon — referring to price differences that occur when futures markets close for the weekend — has historically acted as a magnet for Bitcoin’s spot price, with traders often expecting these gaps to “fill” over time.

Meanwhile, Trader BitBull identified two additional price zones of interest: $106,000 and $110,000, viewing them as potential short-term retracement levels before a final rally. “I’m still expecting the BTC top is not in, and there’s one big leg up left,” he told followers.

Investor Sentiment Split Between Euphoria and Caution

While optimism around potential rate cuts and institutional inflows continues to underpin Bitcoin’s rally, technical signals suggest an overheated market. Trading volumes have stagnated compared to earlier in the month, and analysts point to emerging bearish divergences in leading indicators like the Relative Strength Index (RSI).

Despite these warning signs, sentiment remains broadly bullish among retail traders. Market chatter across social platforms shows increased optimism that the long-awaited “Uptober” momentum could extend into November, potentially driving Bitcoin toward $120,000 if macro conditions align.

However, institutional desks appear more measured. “The Fed’s tone will be critical — a dovish cut could validate risk appetite, but a cautious statement might cool the euphoria,” said Elena Morozova, head of research at CryptoQuant Global.

The Road Ahead: Between Liquidity and Leverage

With the Fed decision looming and derivatives markets heavily leveraged, the next 48 hours could define Bitcoin’s near-term trajectory. A clean break above $117,000 would likely fuel a continuation rally, while a pullback toward the $111,000–$110,000 zone could flush out excess leverage before setting a stronger base.

The interplay between macroeconomic policy and market psychology remains central. As traders await Jerome Powell’s comments, Bitcoin continues to oscillate between bullish conviction and technical fragility — a reflection of both maturing institutional interest and persistent speculative behavior in crypto markets.