Bitcoin and risk assets enter a pivotal week following the Fed’s recent rate cut, with the focus now shifting to how markets digest global liquidity acceleration and the evolving macro backdrop. While easing remains supportive for risk sentiment, Bitcoin has so far lagged behind the historically strong correlation with the Global M2 Liquidity Index, highlighting short-term headwinds even amid constructive medium-term conditions.

Equity markets continue to hit fresh record highs, while gold surges above $2,650, driven by pronounced U.S. dollar weakness. For crypto traders, this week offers critical insight, as digital assets must navigate their own recovery against a backdrop of historic liquidity expansion and ongoing macro volatility.

Here’s what we’ll cover today:

Let’s get into it.

Global stocks pushed to fresh record highs on Friday, with the MSCI ACWI Index breaking above 970. The steady advance throughout 2025 reflects improving global growth expectations and synchronized central bank pivots toward easier policy. Still, momentum readings in the lower panel suggest caution may be warranted in the near term, as equities now look technically stretched.

Despite the Federal Reserve’s recent rate cut, the benchmark 10-year Treasury yield has moved higher, climbing to nearly 4.15%. This counterintuitive development underscores what some analysts are calling “market dissonance”: stocks making new highs while longer-dated yields rise. Whether the current bull rally can be sustained may now depend on the 10-year yield staying contained, as further increases could eventually weigh on equity valuations.

Gold’s surge to new record levels above $2,650 has been fueled largely by pronounced U.S. dollar weakness, with the Bloomberg Dollar Index sliding from above 1300 to near 1200. The inverse correlation has played out cleanly, as precious metals continue to benefit from the dollar’s multi-month decline. Both moves appear underpinned by structural shifts in global monetary policy expectations, offering durable support for gold.

Bitcoin, meanwhile, has diverged from its historically strong correlation with the Global M2 Liquidity Index. While liquidity has accelerated higher following the Fed’s pivot, Bitcoin has so far lagged the move, suggesting the digital asset has yet to fully reflect this backdrop. 

Historically, Bitcoin tends to follow liquidity with a lag of several weeks, leaving open the possibility of catch-up if the relationship reasserts. That said, the current deviation warrants attention, as it may indicate short-term headwinds or shifting market dynamics even against a more constructive medium-term outlook.

The Crypto Fear and Greed Index we track for market sentiment and investor positioning fell further amid the recent Bitcoin and crypto sell-off, now sitting at 44, still in neutral territory, just shy of fearful sentiment. This is not alarming; historically, when this metric has dipped into fear or extreme fear territory, it has presented investors with exceptional entry opportunities that capitalized on subsequent reversals.

As anticipated, total Bitcoin Spot ETF net inflows closed last week in positive territory, marking an almost fully green week with inflows every day except Wednesday, the day of the FOMC meeting and interest rate decision. The fact that inflows on Friday were positive signals continued investor confidence entering the weekend.

Given the recent sell-off, it will be interesting to see whether inflows pick up on Monday as investors attempt to buy the dip, or if caution persists and selling continues into the start of the week.

The most critical event for crypto this week is Friday’s U.S. Core PCE release, the Fed’s preferred inflation gauge and the clearest input for policy direction into year-end. Markets are still digesting last week’s rate cut, and this week’s data will determine how much easing momentum can build. A softer PCE would reinforce liquidity tailwinds, while a hotter reading could temper expectations.

In addition, Tuesday’s Services and Manufacturing PMI prints, alongside Chair Powell’s speech, will set the early tone for risk sentiment and potentially hint at the Fed’s confidence in the current policy path. On Thursday, Q2 GDP and weekly jobless claims will provide an updated look at growth and labor market strength. Together, these will shape expectations on how aggressive easing can be in the coming months.

What to watch in Friday’s Core PCE release:

Crypto investors should closely monitor these indicators, with particular focus on Friday’s PCE, as it will drive volatility and refine expectations for the Fed’s next steps. This week’s data will be critical in shaping opportunities for crypto traders into Q4.

Despite losing $116,900 on Friday, Bitcoin managed to hold above the $115,300 key level over the weekend, until sharply and suddenly selling off early this Monday morning, dropping below both the $115,300 and $113,300 support levels, before finding support just above the key level of $111,900, a crucial level to hold for a potential reversal to occur.

The two-week Bitcoin liquidation heatmap clearly shows the leveraged liquidations on the downside that occurred with this past move. While some downside leverage remains, notably around $110,000, the most significant clusters in volume are now positioned above price, notably above swing highs at $118,000 and reaching up to $120,000 and beyond, a positive sign.

Bullish Scenario
In the bullish case, we want to see Bitcoin hold above the important $111,900 key level and ideally show bullish momentum as buyers step in. Long opportunities open on a successful bullish retest of $111,900, with targets at $113,300 and $115,300, and invalidation if price drops below entry. If price reclaims $115,300 as well, additional long opportunities 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 moves lower, extending the pullback. Short opportunities appear 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 loses $111,900, short setups may form on a bearish retest of $111,900, targeting a move back to $109,300.

The collective altcoin market has pulled back significantly as well, following Bitcoin’s major sell-off. TOTAL3 lost technical support at the 1.13T key level and fell lower, breaking through 1.09T and dipping to 1.06T, just above the 1.05T key level. A full retest of 1.05T remains very possible unless Bitcoin shows notable strength and major altcoins like Ethereum and Solana trend higher, which could then create new entry opportunities across various altcoins.

Ethereum/Bitcoin has also declined but so far managed to hold above the 0.03721 key level. Despite briefly wicking below, it has not yet closed a daily or 4h candle beneath that crucial mark. This resilience can be seen as a positive sign, although downside risk remains if Bitcoin continues to face pressure.

In this environment, altcoin exposure should be managed with extra caution. Traders may consider reducing leverage and focusing on stronger names, while avoiding overexposure to weaker mid- and small-cap assets that may lag further. A balanced approach between holding core positions and keeping stablecoin reserves is advisable until market structure stabilizes and Bitcoin confirms a recovery.

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

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