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After a strong summer, Bitcoin enters a critical September week with inflation data in focus. With the Fed’s rate cut fully priced in, the big question is whether policymakers move by 25bps or surprise markets with a jumbo 50bps cut. Either way, easing supports risk assets in the short term, but the bond market is flashing warnings that the longer-term backdrop could be far more complex.

Recent data shows labor market resilience, giving the Fed cover to cut aggressively without destabilizing employment. At the same time, gold and silver have been surging, a reminder that investors are repositioning ahead of monetary easing cycles. For crypto, these macro shifts create both opportunity and risk as liquidity expectations collide with inflation uncertainty.

Here’s what we’ll cover today:

Let’s get into it.

Market expectations for Fed action have shifted sharply, with the probability of a jumbo 50+ basis point cut in September now at 12%. This is a remarkable reversal from last year’s fears of relentless tightening. Such expectations for aggressive easing create favorable near-term conditions for Bitcoin and crypto, which have historically thrived during periods of monetary expansion and currency debasement.

Yet while the short-term setup is constructive, the bond market is flashing warnings about the long-term. The 30-year Treasury yield has stabilized just under the key 5% threshold, calming fears of runaway long-end rates. Still, the 200-day moving average continues to slope higher, reflecting underlying structural pressures. This stability suggests the Fed can cut aggressively in the short run, but longer-term inflation and growth risks remain unresolved. The risk backdrop could become far more complex again, especially as global trade dynamics shift under Trump’s tariff unwind.

On the labor side, resilience continues to surprise. Despite recession chatter and earnings pressures, JOLTS layoff data shows employers are not engaging in large-scale cuts. Layoffs remain well below historical averages and far from the extremes of 2008 or the pandemic shock. This ongoing strength provides the Fed with room to ease policy more aggressively without immediately destabilizing the jobs market.

Meanwhile, traditional safe havens are already signaling what expansionary cycles can deliver. Gold and silver have more than doubled since September 2022, underscoring how investors reposition when policy pivots toward easing. The rally in precious metals serves as a clear precedent for Bitcoin’s potential trajectory. 

Both benefit from liquidity injections and currency debasement concerns, reinforcing why crypto assets stand to gain in the short term, even as bond markets remind us that the longer horizon may hold renewed challenges.

The Crypto Fear and Greed Index we track for market sentiment and investor positioning currently shows a perfectly neutral reading of 50, signaling that the market is balanced, neither overbought nor oversold, and providing a healthy foundation for price action to develop over the coming days and weeks.

Meanwhile, total Bitcoin Spot ETF net inflows ended last week negative, with outflows on both Thursday and Friday, sending mixed signals and suggesting some de-risking ahead of the weekend. Entering the new week, with key inflation data on the horizon, we are not expecting flows to decisively pick a direction, but rather to remain relatively small, with mixed in- and outflows.

The most critical event for crypto this week is Thursday’s U.S. CPI release, which will be the clearest signal for the Fed’s September rate cut. Markets are already fully pricing in a cut, the debate is whether it will be 25bps or 50bps. Either way, policy is shifting toward easing, which is supportive for Bitcoin and crypto.

In addition, Tuesday’s 12-month BLS data revision will update the labor picture and could slightly adjust perceptions of the Fed’s path. Wednesday’s PPI will give an early look at producer-level inflation pressures. Thursday’s CPI, together with initial and continuing jobless claims, will be the decisive moment for how aggressive the Fed can be. Friday’s Michigan inflation expectations and consumer sentiment survey will refine the view on household demand and longer-term inflation trends.

What to watch in Thursday’s CPI release:

Crypto investors should closely monitor these indicators, with particular focus on CPI, as they will drive volatility and refine expectations around the size of the Fed’s cut. This week’s data will be pivotal in shaping opportunities for crypto traders heading into September.

After facing rejection at the $113,400 key price level on Friday, Bitcoin trended lower and then traded sideways over the weekend, holding between $109,300 and $111,900 without significant volatility. Early this morning, price began moving higher and is currently reclaiming the $111,900 key level once again.

The two-week Bitcoin liquidation heatmap shows clusters of significant liquidation volume on both sides of the current price. On the downside, the largest cluster sits at $107,000, while on the upside, the most notable cluster is just above the recent swing high and above the key level at $114,000.

Bullish Scenario
In the bullish case, we want to see Bitcoin decisively reclaim the $111,900 key level. From there, price could trend higher, targeting previously important levels. Long opportunities arise on a successful bullish retest of $109,300, aiming for $111,900, with invalidation if price drops below entry. Additionally, if price reclaims $111,900, further long opportunities could appear, targeting the next higher key level at $113,400.

Bearish Scenario
In the bearish case, Bitcoin faces rejection at $111,900 again and fails to reclaim that level. Short opportunities arise on a successful bearish retest of that level, targeting the next lower key level at $109,300. This trade would be invalidated if price reclaims $111,900.

The collective altcoin market has been showing strength, holding elevated levels and trending sideways just below the 1.105T mark. It actually reclaimed this level again this morning, potentially confirming a breakout. It is now of utmost importance that this metric holds above this key level and ideally trends higher, in order to allow altcoins collectively to push higher.

Ethereum/Bitcoin, interestingly, has been trending lower, likely looking to retest a previous key level at 0.03723. This signals relative short-term weakness of Ethereum compared to Bitcoin. Notably, this still appears to be just a pullback within a larger bullish structure and is likely not dramatic, but it remains worth monitoring. 

In fact, this creates an opportunity for those who are Bitcoin-heavy to rotate capital at favorable prices into higher-cap altcoins, with the potential to benefit from outperformance once Ethereum and large caps regain relative strength.

We hope this report provided you with valuable insights into the latest market developments and geopolitical shifts.

As always, stay informed, stay prepared, and have a fantastic week ahead! 🚀

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