Bitcoin and risk assets enter a pivotal week with the Fed’s September rate cut essentially priced in. The key question is now not if the Fed will cut, but by how much, 25bps or 50bps? While easing supports short-term risk appetite, underlying macro indicators, including sticky inflation and rising unemployment, suggest the broader picture remains complex.

Equity markets continue to hit record highs, reflecting the market’s confidence in policy-driven gains rather than fundamentals. For crypto traders, this week is packed with opportunity, as liquidity expectations collide with key macro data points.

Here’s what we’ll cover today:

Let’s get into it.

The S&P 500 has notched multiple record highs in 2025. Markets are effectively front-running policy easing, with the belief that lower rates will lift valuations across equities and alternative assets alike. This persistent equity strength, despite clear macro headwinds, highlights just how dominant monetary policy expectations have become in driving risk asset pricing.

Yet beneath the surface, the macro picture is far less reassuring. The Fed’s preferred inflation gauge, core PCE, has remained sticky, complicating progress toward the central bank’s dual mandate. At the same time, unemployment has climbed to roughly 4.3%, a sharp deterioration from the historically tight labor markets of recent years. This uneasy mix of persistent inflation and weakening employment places the Fed in a difficult position, increasingly pushing policymakers toward prioritizing labor market support over inflation control.

The stress in employment is hard to dismiss. Initial jobless claims have surged to their highest levels since 2021, with the four-week moving average confirming that this is more than short-term noise. The sustained elevation signals real weakness spreading through the labor market, strengthening the Fed’s case for aggressive rate cuts even if inflation lingers above target.

The bond market has already made up its mind. Traders are pricing Fed funds to fall well below 3% by mid-2025, a far steeper easing path than the Fed’s own dot plot suggests. The SOFR curve points to deeper cuts than policymakers currently acknowledge, reflecting either expectations of a sharper economic downturn or confidence that inflation will cool faster than the Fed projects. 

For a deeper breakdown of the upcoming FOMC decision, including detailed scenarios and their implications for bitcoin and crypto, see our “Key Events Ahead” section below.

The Crypto Fear and Greed Index we track for market sentiment and investor positioning currently sits at a neutral reading of 52, indicating a balanced market, still, neither overbought nor oversold. This provides a healthy foundation for price action to develop, particularly as we head into a potentially volatile period with both the Fed and Bank of Japan interest rate decisions on deck.

As anticipated, total Bitcoin Spot ETF net inflows closed last week in positive territory, marking a fully green week with inflows every single day and no outflows. This is a bullish signal, highlighting steady demand and investor confidence as we enter the FOMC meeting week despite heightened volatility risks.

With the ISM Manufacturing PMI stuck in contraction at 48.7 and unemployment trending higher, the case for policy easing is overwhelming. This backdrop reinforces that crypto is not overextended here and likely has further upside as liquidity expectations build.

Rate cuts at this week’s FOMC meeting are essentially certain, with the market now focused on the size of the move.

The most critical event for crypto this week is Wednesday’s U.S. Federal Reserve meeting, where a 25 basis point rate cut is widely anticipated. This decision is influenced by recent economic data, including a weaker-than-expected labor market. Markets are closely monitoring the Fed's actions, as they will signal the central bank's stance on economic conditions and its approach to monetary policy.

Thursday’s Jobless Claims and Philly Fed Manufacturing Index will provide additional context on labor market dynamics and regional economic activity, further informing the outlook for monetary policy.

Friday’s Bank of Japan Interest Rate Decision and Monetary Policy Statement will be closely watched for indications of the central bank's approach to managing inflation and economic growth in Japan. 

What to Watch in Wednesday’s Fed Meeting:

Crypto investors should closely monitor these indicators, 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.

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After reclaiming the $115,300 key level on Friday, Bitcoin spent the weekend trading sideways between $115,300 and $116,900, respecting the range without breaking out in either direction. Following a rejection at $116,900 this morning, price has pulled back sharply and now fell below support at $115,300.

The two-week Bitcoin liquidation heatmap highlights clusters of significant liquidation volume on both sides of the current range. To the downside, the largest cluster sits at $110,000, while to the upside, the most notable cluster lies just above the recent swing high and the key level at $116,900, hinting at potential continuation of the bullish trend.

Bullish Scenario
In the bullish case, we want to see Bitcoin reclaim the $115,300 key level. Long opportunities open on a successful bullish retest of $115,300, with targets at $116,900 and invalidation if price drops below entry. If price reclaims $116,900 as well, additional long opportunities could emerge, targeting the next higher key level at $118,300.

Bearish Scenario
In the bearish case, Bitcoin fails to hold above $115,300 and moves lower. Short opportunities appear on a successful bearish retest of $115,300, with downside targets at $113,400 and invalidation if price reclaims the entry level. Additionally, if price revisits $116,900 but shows weakness and lack of bullish momentum, short setups may form on a bearish retest of $116,900, targeting a move back to $115,300.

The collective altcoin market has pulled back slightly, after TOTAL3 set a new all-time high by breaking above 1.13T, now trending toward the previous area of interest at 1.09T. This minor pullback is not concerning, as price has been trending higher consistently without interruptions since reclaiming 1.05T, making this a healthy reset in price action after reaching new record highs and continuing the overall structural uptrend.

Ethereum/Bitcoin has been trending lower as well, losing the 0.0404 level again desptite reclaiming it briefly on Saturday. Here as well, the bullish trend structure remains in tact and as long as ETH BTC is able to hold elevated levels and stay above 0.03723, we are not concerned about potential reversals.

Entering Q4 we are continuously focusing on high cap altcoinns and industry leaders, although we are slowly starting to take mid caps and potential growth coins into sight, as they are expected to provide higher returns in the next stage of the cycle and in the next move higher. As we are focused on risk management, capital protection remains key and we are not foaming into any moves or projects, remaining data driven and objective and defensive in our approach.

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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