Bitcoin volatility nears yearly floor as Fed decision, U.S. midterms approach

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Bitcoin volatility ahead of Fed

Highlights

Bitcoin's 28-day realized volatility dropped to 1.2%, nearing its 2026 low, as traders reduce risk ahead of the Fed's Oct. 28 meeting and Nov. 3 U.S. midterm elections.
Average daily bitcoin spot volume stands at $2.5 billion, down 1% from the previous week, with prices trading in a tight $80,000 to $84,000 band since Sept. 21.
Bitcoin's returns closely tracked the Nasdaq with nearly identical performance over the past two weeks, and last week's limited 2% bitcoin decline paralleled the Nasdaq's worst week since April 2025.

Low trading activity ahead of key dates

As reported by The Block, citing K33, bitcoin's 28-day realized volatility has fallen to 1.2%, putting it close to its lowest level of 2026 as traders avoid taking on additional risk before the Fed's Oct. 28 meeting and the Nov. 3 U.S. midterm elections. The firm says bitcoin has spent the past week trading between $80,000 and $84,000, while average daily spot volume stands at $2.5 billion, down 1% from the previous week.

K33 says bitcoin has remained in a narrow band since Sept. 21, with participation levels resembling the market's recovery phase in 2023. Vetle Lunde, K33's head of research, says volatility expansions typically follow such compression periods and expects BTC volatility to increase shortly.

Correlation with equities returns

Bitcoin is again moving closely with the Nasdaq after that relationship weakened in August and September, with returns for both assets nearly identical over the past two weeks. K33 says bitcoin's relatively limited 2% decline during last week's equity sell-off does not signal a new break from stock market behavior, even as the Nasdaq posts its worst week since early April 2025.

Joel Kruger, market strategist at LMAX Group, says digital assets remain in a consolidation phase, with bitcoin and ether still searching for direction after the rebound through August and September. He adds that recent moves in Treasury yields and the dollar suggest broader financial market adjustments remain uneven, while markets are pricing an 80% chance that the Fed leaves rates unchanged at its upcoming meeting.

Our earlier analysis of the Nasdaq 100 sell-off highlighted how the index dropped below its 20-day and 50-day moving averages after hotter US inflation data, pointing to rising near-term selling pressure. We also noted an unusual backdrop of falling US Treasury yields alongside the equity decline, suggesting a shift in risk sentiment and making key technical levels (including 28,526 support) critical to watch.

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