Bitcoin and risk assets enter a critical week as markets reassess the Federal Reserve’s policy path. Futures now show less conviction for two more rate cuts before year-end, with sticky inflation and mixed economic data complicating the Fed’s easing cycle. This repricing has lifted the implied December 2025 Fed Funds rate to around 3.7%, compared to 3.20% in April, while the current effective rate remains near 3.95%.

Meanwhile, the U.S. dollar is holding its 100-day average after months of decline, Treasury markets are shifting how they react to employment reports, and demand for volatility hedges is climbing. Together, these dynamics highlight a market in transition, one where crypto must navigate renewed uncertainty in growth, liquidity, and policy direction.

Here’s what we’ll cover today:

Let’s get into it.

Markets have shifted their outlook on Federal Reserve policy, with futures now showing less confidence in two more rate cuts before year-end. The implied December 2025 Fed Funds rate has risen from around 3.20% in April to about 3.7% today, compared to the current effective rate of 3.95%. This repricing reflects a reassessment of the Fed’s easing cycle, as persistent inflation and mixed economic data complicate the central bank’s next steps.

The Bloomberg Dollar Index is holding near its 100-day moving average around 1,206 after failing to stage a meaningful recovery in September. Having already fallen from above 1,300 earlier this year, the dollar’s inability to bounce from support suggests its broader downtrend could continue. A decisive break below the 100-day average may trigger accelerated selling, potentially revisiting levels last seen at the start of the year.

Treasury markets are also signaling change. In recent months, employment reports that once pushed 10-year yields higher have instead led to declines of 10–20 basis points. This shift points to growing investor concern that labor market weakness could drag more heavily on growth.

Meanwhile, demand for volatility hedges has surged. VIX-linked products like VXX have climbed above $1 billion in assets under management in 2025, with leveraged funds such as UVIX and UYXY also expanding rapidly. This buildup reflects investors positioning for continued turbulence and a willingness to pay premiums to protect against potential drawdowns. 

As we head into the final quarter of 2025, these dynamics underscore a market in transition, one where previous certainties about growth, policy, and asset correlations are being tested. The coming weeks will be critical in determining whether these defensive postures prove prescient or premature.

The Crypto Fear and Greed Index we track for market sentiment and investor positioning climbed back into neutral territory, now showing a reading of 49 as bitcoin recovered from 109,300 back to 111,900. With this move, fearful sentiment has reduced and market participants may be more in expectation of healthy price action in the coming days, especially if BTC manages to reclaim the 112,000 key level.

Total Bitcoin Spot ETF net flows closed last week in the red, with outflows on Thursday that intensified through Friday. For price to trend higher, we'd like to see renewed demand by institutions and traditional players through ETFs, which is why we are monitoring this metric closely as we enter this new week. 

Historically, strong trends in bitcoin price action have been accompanied by positive ETF flows.

The most critical event for crypto this week is Friday’s U.S. labor market data, with Nonfarm Payrolls, the unemployment rate, and average hourly earnings all set for release. Together, these will provide the clearest signal on the Fed’s policy path and the balance between growth and inflation pressures heading into Q4. A cooling labor market would support the case for further easing, while stronger readings may reinforce a more cautious approach.

Earlier in the week, housing and consumer data set the tone: Monday brings Pending Home Sales, while Tuesday delivers JOLTS Job Openings and Consumer Confidence. Mid-week, investors will parse ADP Nonfarm Payrolls and ISM Manufacturing PMI for early signals on hiring trends and industrial activity. Thursday’s weekly Jobless Claims will further refine the picture of labor market momentum. We also monitor ISM readings closely, as historically they have aligned strongly with phases of Bitcoin and crypto market expansion.

What to watch in Friday’s labor market release:

Crypto investors should watch this week’s data closely, with Friday’s jobs report being the key volatility driver. The outcome will directly shape expectations for Fed policy into year-end and set the tone for crypto markets moving into Q4.

After trading sideways since Thursday in a very tight range just above the $109,300 key level, Bitcoin managed to jump sharply toward the $111,900 key price level and has again attempted to reclaim it this morning. For now, this move still needs to be treated with caution from a technical perspective, as it continues to mark a lower high within the broader bearish trend until the previous swing high at $114,000 is reclaimed.

As Bitcoin pushed higher, the two-week liquidation heatmap shows clusters of leveraged liquidations not only above at $118,600, but also building below, with a significant cluster at $108,400. A move toward these lower liquidations would fit neatly into the bearish continuation narrative, as taking them out would establish a fresh lower low.

Bullish Scenario
In the bullish case, we want to see Bitcoin hold above the just-reclaimed $111,900 key level and ideally trend higher, breaking the bearish structure. Long opportunities open on a successful bullish retest of $111,900, with upside targets at $113,300 and $115,300 and invalidation if price falls back below entry. If price reclaims $115,300 as well, further long setups could emerge, targeting the next higher key level at $116,900.

Bearish Scenario
In the bearish case, Bitcoin fails to hold above $111,900 and turns lower again, likely extending the pullback and continuing the bearish trend. Short opportunities open on a successful bearish retest of $113,300, with downside targets at $111,900 and invalidation if price reclaims the entry level. Additionally, if price breaks and loses $111,900, short setups may form on a bearish retest of this level, targeting a move back to $109,300.

After pulling back from new highs above the $1.13T mark, the TOTAL3 altcoin market cap index has now found support at the $1.05T technical level and bounced higher from there on Sunday, following Bitcoin’s bullish reaction. From a technical perspective, TOTAL3 needs to reclaim $1.1T, the previous lower swing high, in order to invalidate the bearish market structure and open the way toward $1.13T and potentially fresh all-time highs.

Ethereum/Bitcoin has not yet managed to trend higher and remains in a clear bearish lower-timeframe trend from its late August highs. ETH/BTC needs to reclaim the 0.03723 key level and push higher from there, ideally reclaiming 0.0404 as well to decisively confirm strength.

While the recent dip has created favorable spot entry opportunities in various altcoins, price action must still be monitored closely, as bearish trends remain unbroken and risk for long positions persists. That said, we continue to monitor and dollar-cost average into major coins at favorable entries, always watching our key levels closely.

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

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