Is Bitcoin’s $100K Floor at Risk as the Fed Struggles to Find Its “Neutral” Rate?

The Federal Reserve has started cutting rates, but no one—not even the Fed itself—seems sure how far it should go. Markets are caught in the middle of this guessing game, and Bitcoin price is feeling the heat. With the world’s largest cryptocurrency hovering around $107,000 after a steep drop from its October highs, traders are asking one thing: has Bitcoin’s next big move already begun, or is the floor about to give way?

The Macro Setup: A Fed Without a Compass

The Federal Reserve has started cutting interest rates, but the debate inside the central bank is far from settled. The “neutral rate”; the mythical point where monetary policy neither stimulates nor restricts the economy; remains elusive.

If the neutral rate ends up higher than expected (around 3.5%–3.9%), the Fed will have limited room to cut further. That means borrowing costs stay elevated longer, liquidity tightens, and risk assets like Bitcoin face stronger headwinds. On the other hand, if the true neutral rate is closer to 2.5%, we could see a softer landing and more fuel for Bitcoin’s next leg up.

The post-COVID landscape complicates this picture. Rising government spending, AI-driven productivity debates, and the reconfiguration of global supply chains all push inflation expectations higher — forcing the Fed to keep its foot closer to the brake than the gas. That uncertainty alone is enough to keep Bitcoin price volatile.

Bitcoin Price Prediction: BTC Losing Grip Near $107K Support

The daily Bitcoin price chart paints a cautious picture. After a failed breakout above $122,000 in early October, Bitcoin has slipped sharply, now testing the lower Bollinger Band near $104,000. Heikin Ashi candles show sustained bearish momentum — long red bodies with minimal upper wicks — confirming strong selling pressure.

The 20-day SMA (around $116,000) has turned into a resistance ceiling, with price consolidating below it. Until Bitcoin price reclaims this zone, short-term bias remains bearish. If current momentum persists, downside targets lie near $103,000 and $99,500 — a critical confluence zone where historical demand previously stepped in.

However, the flattening of the lower Bollinger Band suggests a possible deceleration in the selloff. A few sideways sessions around $106,000–$108,000 could precede either a sharp rebound or another leg down toward $100K.

Liquidity and the “Neutral Rate” Link

Bitcoin’s price historically responds to liquidity conditions more than anything else. Every major rally — from 2020’s $10K breakout to 2024’s all-time high — has coincided with looser financial conditions.

If the Fed undershoots the neutral rate and cuts too aggressively, it risks reigniting liquidity-driven rallies. In that case, BTC price could quickly bounce off the $105K region and aim for $115K–$120K in a short squeeze. But if the Fed tightens again or signals that rates will stay “higher for longer,” that could drain speculative capital and pull BTC price toward the psychological $100K mark — or even $95K if panic accelerates.

Sentiment and Volatility Outlook

Market sentiment remains mixed. Derivatives data show reduced leverage, and spot volume has declined since early October. That’s a classic setup for volatility compression — a quiet before a directional storm.

The Bollinger Band squeeze on the daily chart reinforces this idea. Once volatility re-expands, the breakout direction will set the tone for the rest of Q4. A close above $110K could trigger a relief rally toward $117K, while a breakdown below $104K would confirm a deeper retracement.

The Broader Economic Implication

Bitcoin price isn’t just reacting to rate cuts; it’s reacting to uncertainty about what comes next. The Fed’s confusion over where the “neutral rate” actually sits means markets are trading in the dark.

If structural forces like AI productivity and fiscal expansion push real rates higher, Bitcoin’s long-term narrative as a hedge against fiat debasement strengthens. But in the short term, tighter liquidity and elevated yields keep speculative appetite low.

Bitcoin Price Prediction: What Happens Next?

The next 10–14 days will be critical. Watch for:

• Whether BTC price holds the $106K–$104K support band.
• How the Fed communicates its next rate path — any hawkish tone could accelerate downside momentum.
• Bond yield movements: a rise in the 10-year Treasury above 4.5% could pressure crypto further.

If $BTC price stabilizes and consolidates without breaking $104K, expect a rebound toward $112K–$115K by early November. But if the current macro environment deteriorates and liquidity tightens, a deeper pullback to $98K–$100K becomes likely before the next macro-driven recovery wave.