FOMC Pivot Sparks Market Shift; $USD1 Leads Solana Hype, x402 Builds Ahead of Key Events

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What we will cover this week:

The Federal Reserve’s October 29th FOMC meeting concluded with a 25-basis-point rate cut, bringing the Federal Funds Rate to 4.0%, marking the third reduction of 2025. While the move was expected, markets reacted with surprising volatility - traditional equities fell, tech valuations compressed, and risk assets across the board, including crypto, showed renewed sensitivity to forward guidance rather than immediate rate action.

Recent macro data painted a mixed but stable picture of the U.S. economy:

Overall, the data remained within expectations - signaling a cooling economy but not an outright downturn.

While the Fed delivered the cut markets wanted, Chair Jerome Powell’s tone was notably hawkish. When pressed on the likelihood of another cut in December, Powell clarified that “it is far from a foregone conclusion,” suggesting the Committee remains divided.

This cautious stance rattled markets that had priced in a dovish pivot. In effect, Powell warned that the Fed would not pre-commit to easing until data show sustained labor and inflation weakness.

For crypto, this hesitation delayed the liquidity-driven rally many traders were anticipating.

Despite strong Q3 earnings from mega-cap tech, the S&P 500 fell from ~6,900 to ~6,700, and NASDAQ dropped from ~24,000 to ~23,000.
The key driver was valuation compression - the “Magnificent 7” tech stocks were trading at 31x forward P/E, a 30% premium over the rest of the S&P. As earnings failed to “super-beat” expectations, markets recalibrated.

This correction is not necessarily bearish. Historically, such valuation resets precede healthier market cycles and for crypto, they tend to align with capital rotation from overvalued equities into higher-beta assets like Bitcoin and Ethereum.

On-chain data from Glassnode shows OG Bitcoin whales offloading large positions with $100M to $500M transactions mirroring the sell patterns seen near the 2021 peak. These legacy wallets have historically distributed at market tops and reaccumulated during deep drawdowns. This rotation suggests profit-taking, not accumulation, aligning with macro uncertainty and valuation fatigue.

Institutional activity confirms this shift. For the first time in seven months, net institutional Bitcoin purchases have fallen below daily mined supply. Demand from funds and treasuries is no longer absorbing issuance - a condition that typically precedes short-term drawdowns.

Options and liquidation maps highlight the next volatility trigger. The $93K–$94K zone carries dense liquidation clusters, meaning a break below could cascade into forced selling. Conversely, if liquidity holds there, it becomes a strong base for a relief rally. Traders are watching this level closely as the near-term pivot point for Bitcoin’s next move.

Layer on emerging macro risks: rising debt-fueled corporate spending, potential quantum-security vulnerabilities by 2028, and Wall Street’s increasing control over BTC liquidity and overall sentiment remains fragile.

Bitcoin’s correlation to tech remains high, but it’s structurally weaker relative to the NASDAQ Index amid ongoing institutional repositioning. The near-term setup is high-risk, high-volatility, as smart money adjusts exposure while waiting for the Fed’s next liquidity wave.

Markets are entering a transitional phase: rate cuts have begun, but conviction in a dovish pivot is missing. This hesitation gap - where the Fed cuts but maintains hawkish rhetoric - often creates ideal accumulation windows for crypto investors before liquidity expansion fully resumes.

If inflation continues to cool and employment data weakens further, the next phase would likely involve balance sheet stabilization or an early return to asset purchases by mid-2026 - echoing the 2020–2021 liquidity surge when Bitcoin front-ran global easing cycles.

Bottom Line:

Top Narrative Gainers In The Last 7 Days:

Top Gainers: $ICP (+126.5%), $FIL (+53.8%), $ZEC (+39.8%), $NEAR (+26.8%), $XMR (+15.7%)

Catalyst: Investors are rotating from meme and AI hype to battle-tested Layer 1s amid market volatility. Privacy coins ($ZEC +40%, $XMR +16%) are rallying on regulatory concerns, while AI/DePIN plays ($ICP +127%, $FIL +54%, $NEAR +27%) are fueled by increased compute demand following AWS outages.

Top Gainer: $SOON (+180%)

Catalyst: @soon_svm launched the x402 Trilogy - AI-native micropayments and prediction markets.

Example: 10sSOON - Pay 1 USDC (x402 on Base) to guess BTC’s direction in 10 seconds → win $10s tokens → automatically LP on AerodromeFi.

Takeaways:

Read more: USD1 – The “America First” Stablecoin Shakes Up Solana & DeFi

Our radar expanding on these ecosystems:

Full news roundups for the week from November 3rd - November 9th: Here

This week’s watchlist highlights notable projects we believe are worth monitoring, chosen for their strong fundamentals and key upcoming catalysts.

Full list: Projects to Watch (November 3rd - November 9th)