Bitcoin volatility nears 2026 lows as traders brace for Fed decision and US midterms

Bitcoin's 28-day realized volatility is approaching its lowest level of the year, with traders showing little appetite for taking on additional risk ahead of the Federal Reserve's next interest rate decision and the U.S. midterm elections, according to research and brokerage firm K33.

In its latest market report, K33 said bitcoin's 28-day volatility had fallen to 1.2%, with the cryptocurrency spending the past week between $80,000 and $84,000. Average daily spot trading volume was $2.5 billion, down 1% from the previous week. Bitcoin has been trading in a narrow range since Sept. 21, with K33 comparing the lack of participation to the market's recovery in 2023. "Expansions typically follow such compressions, and we expect BTC volatility to pick up shortly," K33 Head of Research Vetle Lunde said.

Despite the lower price volatility, BlackRock's IBIT fund recorded inflows equivalent to 8,128 BTC on Oct. 19, its largest daily inflow in bitcoin terms since April 2025. Across all U.S. spot bitcoin exchange-traded funds, net inflows amounted to 6,436 BTC that day, per K33's data, with the other funds recording a combined net outflow of 1,692 BTC.

Bitcoin and Nasdaq correlation picks up

Meanwhile, bitcoin Bitcoin (BTC) has become highly correlated with the Nasdaq again after the relationship weakened through August and September, with returns for the two almost identical over the past fortnight, K33 found. Bitcoin held up relatively well during last week's equity sell-off, falling around 2% even as the Nasdaq recorded its worst week since early April 2025.

The stock market decline followed a hotter-than-expected U.S. inflation report in September, alongside a semiconductor sell-off prompted by reports of a Chinese memory chip breakthrough. However, K33 cautioned that bitcoin's relative resilience over the week did not amount to a fresh decoupling from equities.

"Digital assets remain in a consolidation phase, with bitcoin and ether searching for direction after the strong recovery through August and September," Joel Kruger, market strategist at LMAX Group, told The Block. Kruger said the recent rebound in Treasury yields and the dollar showed that the adjustment in financial markets remained uneven. "We continue to view the recent setbacks as a breather within that recovery, with dips likely to attract support ahead of a potential resumption of gains into year-end," he said.

Bitcoin (BTC) is trading at around $83,350 on Wednesday, according to The Block's prices page. K33 said markets are pricing an 80% chance of no rate change at the Fed's upcoming Oct. 28 meeting. The U.S. midterm elections take place on Nov. 3.