U.S. Stock Market Rallies Ahead of FOMC; Bitcoin Stabilizes, Ethereum Consolidates

The financial markets showed a mix of momentum and stagnation ahead of key economic developments, signaling divergent trends between traditional equities and digital assets. The U.S. stock market rallied broadly as optimism grew surrounding Federal Reserve policies and U.S.-China trade negotiations, while cryptocurrency markets remained subdued, reflecting profit-taking and technical constraints.

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Stock Market Gains Driven by Trade Progress and Rate Cut Expectations

Major U.S. stock indices closed higher on newfound optimism stemming from developments in high-level trade negotiations between Washington and Beijing. The Dow Jones Industrial Average posted a modest gain of 0.11% to close at 45,883.45. Meanwhile, the S&P 500 increased 0.47% to reach 6,615.28, and the Nasdaq Composite surged 0.94% to close at 22,348.75—both the S&P 500 and Nasdaq achieving record-high closing levels.

President Donald Trump shared positive remarks following trade meetings held in Madrid on Oct. 14–15, suggesting that a resolution to long-standing tensions may be imminent. He highlighted the importance of resolving the status of TikTok, a Chinese-owned platform popular with younger U.S. demographics, as a significant achievement in the negotiations. Trump further revealed a scheduled discussion with Chinese President Xi Jinping on Oct. 19, affirming the strength of U.S.-China relations and contributing to the optimistic tone in equity markets.

Adding fuel to market enthusiasm, expectations rose of a rate cut during the upcoming Federal Open Market Committee (FOMC) meeting. Economists forecast a reduction of at least 0.25 percentage points from the current range of 4.25%–4.50%. Trump hinted at the potential for a more significant decrease, perhaps 50 basis points, emphasizing the strategic timing for such action. Investors view these developments as highly favorable, bolstering market sentiment across the board.

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Bitcoin Trades Sideways Amid Profit-Taking, Ethereum Faces Layer 2 Concerns

While U.S. equities advanced, cryptocurrency markets stagnated. Bitcoin (BTC) remained rangebound, unable to decisively break resistance at $11,600. Ethereum (ETH), which had recently rallied, entered a cooling phase as investors consolidated gains and reassessed long-term trends.

As of 8:30 a.m. (local time) on Oct. 16, Bitcoin traded at 16.071 million Korean won on domestic exchange Upbit, marking a 0.23% daily increase. On Binance, Bitcoin's price saw a marginal bump of 0.01% to $11,547. In contrast, the broader cryptocurrency market declined slightly during the same period. The CoinDesk 20 index, which includes the top 20 altcoins like Bitcoin, dropped 2.75%. Ethereum fell 1.86% to $4,525, while XRP slid 1.16% to $2.99.

Analysts attributed Bitcoin’s stagnation to profit-taking by long-term holders. On-chain data shared by Lookonchain revealed that a whale account holding 1,176 BTC for over eight years transferred those holdings to the Hyperliquid exchange before initiating sell-offs. Glassnode's insights further indicated consistent position liquidations across varying wallet sizes as Bitcoin surpassed the psychologically important $10,000 price level.

Ethereum reflected contrasting dynamics. Concerns over the limitations associated with its Layer 2 upgrades tempered investor sentiment. While Layer 2 solutions aim to alleviate congestion and reduce fees on the Ethereum mainnet, Citigroup’s report cast doubt on their ability to capture meaningful value. It estimated that only 30% of Layer 2 activities contribute directly to Ethereum’s mainnet valuation, raising questions about the sustainability of its recent price surge. Citigroup issued a year-end target of $4,300 for Ethereum, alongside warnings of short-term corrections.

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Liquidations on Bitcoin and Altcoins Reveal Volatility

Data from analytics platform Coinglass painted a volatile picture in the cryptocurrency market. Over the past 24 hours, $47.37 million (₩65.6 billion) worth of Bitcoin positions were liquidated, with 74.3% of these comprising long positions. Across digital assets, total liquidations hit $432.59 million (₩599.7 billion), underscoring bearish pressure in key cryptocurrencies. This liquidation trend mirrors broader investor caution, preventing Bitcoin and Ethereum from sustaining upward momentum.

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Fear & Greed Index Reflects Neutral Market Sentiment

The Alternative Fear & Greed Index, which tracks sentiment in the cryptocurrency sector, dipped slightly to 53 (neutral), down from 55 the previous day. Ranging from 0 to 100, the index reflects selling pressure at lower values and buying sentiment at higher values. Current neutral readings suggest a lack of decisive sentiment among market participants, a factor typically associated with consolidation phases or impending volatility.

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Key Takeaways and Closing Market Perspectives

The financial ecosystem offered two distinct narratives: strength in the U.S. stock market amid geopolitical optimism and central bank policy speculation, versus hesitation in cryptocurrency markets driven by profit-taking and technical challenges. As investors eye the FOMC meeting and Fed rate decisions, the interplay between traditional and digital assets could inform broader trends in both spheres.