Investors are counting down to the Federal Reserve’s Sept. 17 monetary policy decision; markets expect a quarter-point rate cut that could trigger short-term volatility but potentially fuel longer-term gains across risk assets.

The economic backdrop highlights the Fed’s delicate balancing act.

According to the latest CPI report released by the U.S. Bureau of Labor Statistics on Thursday, consumer prices rose 0.4% in August, lifting the annual CPI rate to 2.9% from 2.7% in July, as shelter, food, and gasoline pushed costs higher. Core CPI also climbed 0.3%, extending its steady pace of recent months.

Producer prices told a similar story: per the latest PPI report released on Wednesday, the headline PPI index slipped 0.1% in August but remained 2.6% higher than a year earlier, while core PPI advanced 2.8%, the largest yearly increase since March. Together, the reports underscore stubborn inflationary pressure even as growth slows.

The labor market has softened further.

Nonfarm payrolls increased by just 22,000 in August, with federal government and energy sector job losses offsetting modest gains in health care. Unemployment held at 4.3%, while labor force participation remained stuck at 62.3%.

Revisions showed June and July job growth was weaker than initially reported, reinforcing signs of cooling momentum. Average hourly earnings still rose 3.7% year over year, keeping wage pressures alive.

Bond markets have adjusted accordingly. Per data from MarketWatch, 2-year Treasury yield sits at 3.56%, while the 10-year is at 4.07%, leaving the curve modestly inverted. Futures traders see a 93% chance of a 25 basis point cut, according to CME FedWatch.

If the Fed limits its move to just 25 bps, investors may react with a “buy the rumor, sell the news” response, since markets have already priced in relief.

Equities are testing record levels.

The S&P 500 closed Friday at 6,584 after rising 1.6% for the week, its best since early August. The index’s one-month chart shows a strong rebound from its late-August pullback, underscoring bullish sentiment heading into Fed week.

The Nasdaq Composite also notched five straight record highs, ending at 22,141, powered by gains in megacap tech stocks, while the Dow slipped below 46,000 but still booked a weekly advance.

Crypto and commodities have rallied alongside.

Bitcoin is trading at $115,234, below its Aug. 14 all-time high near $124,000 but still firmly higher in 2025, with the global crypto market cap now $4.14 trillion.

Gold has surged to $3,643 per ounce, near record highs, with its one-month chart showing a steady upward trajectory as investors price in lower real yields and seek inflation hedges.

Historical precedent supports the cautious optimism.

Analysis from the Kobeissi Letter — reported in an X thread posted Saturday — citing Carson Research, shows that in 20 of 20 prior cases since 1980 where the Fed cut rates within 2% of S&P 500 all-time highs, the index was higher one year later, averaging gains of nearly 14%.

The shorter term is less predictable: in 11 of those 22 instances, stocks fell in the month following the cut. Kobeissi argues this time could follow a similar pattern — initial turbulence followed by longer-term gains as rate relief amplifies the momentum behind assets like equities, bitcoin and gold.

The broader setup explains why traders are watching the Sept. 17 announcement closely.

Cutting rates while inflation edges higher and stocks hover at records risks denting credibility, yet staying on hold could spook markets that have already priced in easing. Either way, the Fed’s message on growth, inflation, and its policy outlook will likely shape the trajectory of markets for months to come.

If you’re following the markets, you’ll know the Federal Reserve is poised to cut interest rates next week to stimulate a lagging economy. While most crypto traders are jumping for joy at the thought of fresh liquidity entering the system, not everybody’s happy. The upcoming rate cut, according to some, could have a catastrophic effect on the global economy.

A Rate Cut Is ‘Bad Monetary Policy’

Economist, investor, and everybody’s favorite goldbug Peter Schiff did not mince his words, calling a rate cut a “huge mistake” in a post shared on X.

As crypto traders gear up for a potentially bullish period, Schiff warns of serious consequences that will gravely impact the economy.

His commentary is blunt. He points to recent price moves in gold and silver as clear evidence that the rate cut is being telegraphed by the markets. Schiff wrote:

“Silver just traded above $42. Gold is poised to break to a new record high. I think the precious metals are getting ready to melt up. This is an unmistakable market signal that the Fed’s upcoming rate cut is a huge mistake.”

He argues that the decision will set off a string of cuts and a return to aggressive quantitative easing, potentially with “definitive yield curve control.” Schiff claims the U.S. dollar could lose its reserve currency status as confidence in the Fed’s judgment wavers.

Peter Schiff has long pushed the view that overly easy policy will stoke inflation and put the dollar at risk. He believes that today’s environment represents the Fed’s most damaging error yet.

“Ever since Alan Greenspan rescued the stock market after the 1987 crash, the Fed has made a series of increasingly bad monetary policy mistakes.”

Why Crypto Traders Are Jubilant About a Rate Cut

Risk-on asset traders welcome rate cuts with open arms. Lower interest rates flood markets with cheap capital and loosen financial conditions, which typically results in higher prices for volatile assets like crypto.

Bitcoin, Ethereum, and altcoins tend to rally as liquidity improves, triggering a wave of buying and bullish sentiment. The CME’s FedWatch tool shows market participants almost unanimously expect a cut (93.4%), with bets on both Bitcoin and altcoins accelerating into the meeting.

Lower rates mean money can move out of safe havens and into riskier bets, which is another reason Schiff is opposed to the cut. In plain language: Traders want easy money.

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Recent cycles show crypto runs higher whenever the Fed loosens policy, and traders are already calling for a new bull market as expectations for rate cuts hit fever pitch.

Supporting a Weaker Labor Market

While Schiff sounds the alarm, many respected analysts, including teams at Goldman Sachs, BlackRock, and a 107-economist Reuters survey, see the rate cut as a necessary step to support the weakening labor market and prevent recession.

Goldman’s chief economist expects a series of small cuts, noting softer employment data and muted inflation as justification for easing. Others warn that cutting rates too fast could actually push inflation higher or weaken the dollar, backing some of Schiff’s concerns.

Jefferies strategist David Zervos suggested the Fed might need a deep 75 basis point cut, though he also cautioned that easy money could ultimately hurt by driving up prices and weakening currency fundamentals.

The upcoming Fed rate cut is a flashpoint. Schiff says it risks disaster, spiraling cuts, runaway inflation, and a weaker dollar.

Crypto traders, though, are celebrating the prospect of more easy money and the next phase in the bull run. The broader economist community remains split, weighing soft employment against inflation risk.

Whether the Fed is making a “huge mistake” or a well-timed rescue, the next move will have a lasting impact in both traditional and crypto markets

Mentioned in this article

One of the important indicators of how much load the Ethereum blockchain can safely handle is how the uncle rate responds to the gas usage of a transaction. In all blockchains of the Satoshian proof-of-work variety, any block that is published has the risk of howbecoming a “stale”, ie. not being part of the main chain, because another miner published a competing block before the recently published block reached them, leading to a situation where there is a “race” between two blocks and so one of the two will necessarily be left behind.

One important fact is that the more transactions a block contains (or the more gas a block uses), the longer it will take to propagate through the network. In the Bitcoin network, one seminal study on this was Decker and Wattenhofer (2013), which found that the average propagation time of a block was about 2 seconds plus another 0.08 seconds per kilobyte in the block (ie. a 1 MB block would take ~82 seconds). A more recent Bitcoin Unlimited study showed that this has since reduced to ~0.008 seconds per kilobyte due to transaction propagation technology improvements. We can also see that if a block takes longer to propagate, the chance that it will become a stale is higher; at a block time of 600 seconds, a propagation time increase of 1 second should correspond to an increased 1/600 chance of being left behind.

In Ethereum, we can make a similar analysis, except that thanks to Ethereum’s “uncle” mechanic we have very solid data to analyze from. Stale blocks in Ethereum can be re-included into the chain as “uncles”, where they receive up to 75% of their original block reward. This mechanic was originally introduced to reduce centralization pressures, by reducing the advantage that well-connected miners have over poorly connected miners, but it also has several side benefits, one of which is that stale blocks are tracked for all time in a very easily searchable database – the blockchain itself. We can take a data dump of blocks 1 to 2283415 (before the Sep 2016 attacks) as a source of data for analysis.

Here is a script to generate some source data: http://github.com/ethereum/research/tree/master/uncle_regressions/block_datadump_generator.py

Here is the source data: http://github.com/ethereum/research/tree/master/uncle_regressions/block_datadump.csv

The columns, in order, represent block number, number of uncles in the block, the total uncle reward, the total gas consumed by uncles, the number of transactions in the block, the gas consumed by the block, the length of the block in bytes, and the length of the block in bytes excluding zero bytes.

We can then use this script to analyze it: http://github.com/ethereum/research/tree/master/uncle_regressions/base_regression.py

The results are as follows. In general, the uncle rate is consistently around 0.06 to 0.08, and the average gas consumed per block is around 100000 to 300000. Because we have the gas consumed of both blocks and uncles, we run a linear regression to estimate of how much 1 unit of gas adds to the probability that a given block will be an uncle. The coefficients turn out to be as follows:

Block 0 to 200k: 3.81984698029e-08
Block 200k to 400k: 5.35265798406e-08
Block 400k to 600k: 2.33638832951e-08
Block 600k to 800k: 2.12445242166e-08
Block 800k to 1000k: 2.7023102773e-08
Block 1000k to 1200k: 2.86409050022e-08
Block 1200k to 1400k: 3.2448993833e-08
Block 1400k to 1600k: 3.12258208662e-08
Block 1600k to 1800k: 3.18276549008e-08
Block 1800k to 2000k: 2.41107348445e-08
Block 2000k to 2200k: 1.99205804032e-08
Block 2200k to 2285k: 1.86635688756e-08

Hence, each 1 million gas worth of transactions that gets included in a block now adds ~1.86% to the probability that that block will become an uncle, though during Frontier this was closer to 3-5%. The “base” (ie. uncle rate of a 0-gas block) is consistently ~6.7%. For now, we will leave this result as it is and not make further conclusions; there is one further complication that I will discuss later at least with regard to the effect that this finding has on gas limit policy.

Gas pricing

Another issue that touches uncle rates and transaction propagation is gas pricing. In Bitcoin development discussions, a common argument is that block size limits are unnecessary because miners already have a natural incentive to limit their block sizes, which is that every kilobyte they add increases the stale rate and hence threatens their block reward. Given the 8 sec per megabyte impedance found by the Bitcoin Unlimited study, and the fact that each second of impedance corresponds to a 1/600 chance of losing a 12.5 BTC block reward, this suggests an equilibrium transaction fee of 0.000167 BTC per kilobyte assuming no block size limits.

In Bitcoin’s environment, there are reasons to be long-term skeptical about the economics of such a no-limit incentive model, as there will eventually be no block reward, and when the only thing that miners have to lose from including too many transactions is fees from their other transactions, then there is an economic argument that the equilibrium stale rate will be as high as 50%. However, there are modifications that can be made to the protocol to limit this coefficient.

In Ethereum’s current environment, block rewards are 5 ETH and will stay that way until the algorithm is changed. Accepting 1 million gas means a 1.86% chance of the block becoming an uncle. Fortunately, Ethereum’s uncle mechanism has a happy side effect here: the average uncle reward is recently around 3.2 ETH, so 1 million gas only means a 1.86% chance of putting 1.8 ETH at risk, ie. an expected loss of 0.033 ETH and not 0.093 as would be the case without an uncle mechanism. Hence, the current gas prices of ~21 shannon are actually quite close to the “economically rational” gas price of 33 shannon (this is before the DoS attacks and the optimizations arising therefrom; now it is likely even lower).

The simplest way to push the equilibrium gasprice down further is to improve uncle inclusion mechanics and try to get uncles included in blocks as quickly as possible (perhaps by separately propagating every block as a “potential uncle header”); at the limit, if every uncle is included as quickly as possible, the equilibrium gas price would go down to about 11 shannon.

Is Data Underpriced?

A second linear regression analysis can be done with source code here: http://github.com/ethereum/research/tree/master/uncle_regressions/tx_and_bytes_regression.py

The purpose here is to see if, after accounting for the above computed coefficients for gas, there is a correlation with the number of transactions or with the size of a block in bytes left over. Unfortunately, we do not have block size or transaction count figures for uncles, so we have to resort to a more indirect trick that looks at blocks and uncles in groups of 50. The gas coefficients that this analysis finds are higher than the previous analysis: around 0.04 uncle rate per million gas. One possible explanation is that if a single block has a high propagation time, and it leads to an uncle, there is a 50% chance that that uncle is the high-propagation-time block, but there is also a 50% chance that the uncle will be the other block that it competes against. This theory matches well with the 0.04 per million “social uncle rate” and the ~0.02 per million “private uncle rate” finding; hence we will take it as the most likely explanation.

The regression finds that, after accounting for this social uncle rate, one byte accounts for an additional ~0.000002 uncle rate. Bytes in a transaction take up 68 gas, of which 61 gas accounts for its contribution to bandwidth (the remaining 7 is for bloating the history database). If we want the bandwidth coefficient and the computation coefficient in the gas table to both reflect propagation time, then this implies that if we wanted to really optimize gas costs, we would need to increase the gas cost per byte by 50 (ie. to 138). This would also entail raising the base gas cost of a transaction by 5500 (note: such a rebalance would not mean that everything gets more expensive; the gas limit would be raised by ~10% so that the average-case transaction throughput would remain unchanged). On the other hand, the risk of worst-case denial-of-service attacks is worse for execution than for data, and so execution requires larger safety factors. Hence, there is arguably not sufficiently strong evidence to do any re-pricings here at least for the time being.

One possible long-term protocol change would be to introduce separate gas pricing mechanisms for in-EVM execution and transaction data; the argument here is that the two are much easier to separate as transaction data can be computed separately from everything else, and so the optimal strategy may be to somehow allow the market to balance them; however, precise mechanisms for doing such a thing still need to be developed.

Gas Limit Policy

For an individual miner determining their gas price, the “private uncle rate” of 0.02 per million gas is the relevant statistic. From the point of view of the whole system, the “social uncle rate” of 0.04 per million gas is what matters. If we did not care about safety factors and were ok with an uncle rate of 0.5 uncles per block (meaning, a “51% attack” would only need 40% hashpower to succeed, actually not as bad as it sounds) then at least this analysis suggests that the gas limit could theoretically be raised to ~11 million (20 tx/sec given an average 39k gas per tx as is the case under current usage, or 37 tx/sec worth of simple sends). With the latest optimizations, this could be pushed even higher. However, since we do care about safety factors and prefer to have a lower uncle rate to alleviate centralization risks, 5.5 million is likely an optimal level for the gas limit, though in the medium term a “dynamic gas limit” formula that targets a particular block processing time would be a better approach, as it would be able to quickly and automatically adjust in response to attacks and risks.

Note that the concern about the centralization risks and the need for safety factors do not stack on top of each other. The reason is that during an active denial-of-service attack, the blockchain needs to survive, not be long-term economically centralization-resistant; the argument is that if the attacker’s goal was to economically encourage centralization, then the attacker could just donate money to the biggest pool in order to bribe other miners to join it.

In the future, we can expect virtual machine improvements to decrease uncle rates further, though improvements to networking are eventually going to be required as well. There is a limit to how much scalability is possible on a single chain, with the primary bottleneck being disk reads and writes, so after some point (likely 10-40 million gas) sharding will be the only way to process more transactions. If we just want to decrease equilibrium gas prices, then Casper will help substantially, by making the “slope” of uncle rate to gas consumption near-zero at least up to a certain point.

Expectations surrounding possible rate cuts by the Federal Reserve in September are nearing peak levels, especially among crypto investors. Historically, Fed rate cuts have often meant the start of a bull run since it signals to investors to take more positions in risk assets such as Bitcoin and crypto. Thus, with only two weeks left to the next FOMC meeting, votes are already coming in for what the Fed will do and how the crypto market will react.

Probability Climbs Above 97%

The CME Watch Tool from the CME Group website is now showing the highest probability so far for a Fed rate cut in September. The percentage had fluctuated over the month of August, rising above 92% and then falling back to 75% again as different developments popped up. However, as the market entered the month of September, sentiment has skewed completely toward the positive, and the probabilities have risen drastically.

Related Reading

Bitcoinist had reported that the probability had fallen to 75% toward the end of August. But now the figure is back again, reaching the highest level so far, ahead of the FOMC announcement. The Fed Watch Tool now reads a 97.6% chance that the Fed will cut rates this September and trigger another bull run.

This figure means that there is now only a 2.4% probability that the Fed would choose to keep rates at the same level as they did the last time. In contrast, there is still a 0% chance that there will be a rate hike this September. In fact, there have not been talks of a Fed rate hike for months now, suggesting that all focus remains on the rate cuts.

How The Crypto Market Could React

Naturally, a Fed rate cut is bullish for both the stock and crypto markets as it allows investors to take on more risks. This triggers a flow of liquidity into the market, driving up prices rapidly, while also increasing the volatility of the market at the same time.

The expectation is that the crypto market could rally off the news, especially as US President Donald Trump has been in support of rate cuts for months now. However, there is also the need to be cautious due to high expectations often leading to dashed hopes.

Related Reading

In a report, the on-chain data analytics platform Santiment revealed that social conversations with the words “Fed”, “rate”, and “cut” had risen to the highest level in almost one year. This suggests a lot of bullishness already surrounding the FOMC meeting. But periods like these have often marked the top, leading to a possible “buy the rumor, sell the news” event.

If the latter is the case, then it would mean that prices could rise leading up to the FOMC meeting and then crash if the announcement is different from expectations. Thus, it would be wise to be cautious around this period, especially with the expectation of high volatility.

Featured image from Dall.E, chart from Tradingview.com

Bitcoin rose above $113,000 on Friday as U.S. payrolls increased by 22,000 and the unemployment rate ticked up to 4.3 percent, pushing traders to price a September Federal Reserve rate cut with near certainty.

Per the Bureau of Labor Statistics release, private employers added 38,000 jobs, government payrolls fell by 16,000 and manufacturing lost 12,000.

Average hourly earnings rose 0.3 percent on the month and 3.7 percent on the year, the labor force participation rate edged up to 62.3 percent and average weekly hours held at 34.2. The U-6 underemployment rate reached 8.1 percent.

Bitcoin traded above the $113,000 level during the session while hovering just below that mark on real-time charts.

The weak headline gain followed a week of incremental softening across higher-frequency indicators. Initial jobless claims rose by 8,000 to a seasonally adjusted 237,000, while private-sector payroll growth in the ADP series cooled, reinforcing evidence of slower hiring, according to Trading Economics data

Separately, the services side of the economy improved but showed persistent price pressure: the ISM Services PMI firmed in August, new orders advanced, and the prices-paid index eased only slightly to a still-elevated 69.2.

On costs, the Labor Department revised second-quarter nonfarm productivity up to a 3.3 percent annualized pace and unit labor costs down to 1.0 percent, a combination that supports disinflation at the margin.

Trade flows added another piece to the macro picture. The U.S. goods and services deficit widened to $78.3 billion in July as imports rebounded, the largest gap since early spring, per the latest joint release from the Bureau of Economic Analysis and Census Bureau. That pattern points to resilient domestic demand and front-loading related to tariff policy, even as hiring momentum slows.

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Rate expectations adjusted quickly after the August payrolls figures. Futures implied probabilities tracked by the CME FedWatch Tool showed markets treating a September reduction as a base case, with some chance of a larger move discussed in rates commentary during the trading day.

The chance of a 50bps cut sat at 0% yesterday but has now jumped to 12%, while the 3.6% chance of no cut has evaporated to 0%.

The setup is straightforward for crypto: a softer labor market and contained wage growth raise the probability of easier policy, which has historically supported liquidity conditions that can lift risk assets, including Bitcoin.

The mix of slower hiring, firm services demand, and improving productivity leaves the policy debate finely balanced heading into the September 16–17 meeting.

If service inflation pressure, captured in ISM prices, moderates alongside cooling labor conditions and lower unit labor costs, the Fed has room to begin a measured easing cycle, a backdrop that crypto markets have already started to discount.

The committee’s decision will finalize the near-term path for dollar liquidity and duration, and by extension, the tone for digital asset trading into quarter-end.

The Fed meets September 16–17.

River says companies are taking in far more bitcoin each day than miners create.

The U.S.-based bitcoin financial services firm, which runs brokerage and mining operations and publishes research, released a Sankey-style flow infographic dated Aug. 25 in a post on X. In this layout, outflows are shown on the left, inflows on the right, and the thickness of each line represents the size of the net daily movement.

River defines “businesses” broadly. The category combines bitcoin treasury companies — firms such as Strategy that publicly hold BTC — with conventional companies that keep bitcoin on their balance sheets. Based on public filings, custodial address tagging and its own heuristics, River estimates that about 1,755 BTC per day flow into business-controlled wallets.

By comparison, River calculates new miner supply at about 450 BTC per day in 2025. That figure reflects the April 2024 halving, which cut the block subsidy to 3.125 BTC per block.

With bitcoin blocks averaging one every 10 minutes — about 144 per day — the result is roughly 450 BTC in new issuance daily, though the exact number fluctuates slightly as block times vary.

That math is the basis for River’s claim that companies are absorbing bitcoin at nearly four times the rate it is mined.

The infographic shows other large institutional inflows as well.

Funds and ETFs account for about 1,430 BTC/day in net inflows, which further boosts total absorption compared with new issuance. Smaller streams go to “other” entities (about 411 BTC/day) and governments (about 39 BTC/day).

River also records a small but steady flow into “lost bitcoin” (about 14 BTC/day), representing coins that the firm judges to be permanently inaccessible, such as through key loss.

On the other side of the ledger, individuals appear as the largest net outflow at about –3,196 BTC/day. River stresses that this does not necessarily mean retail investors are dumping coins. Rather, it reflects bitcoin moving from addresses the firm classifies as individual-held into those it tags as institutional.

River says the takeaway is simple: when inflows to businesses and funds exceed new issuance from miners, available supply tightens. Still, the firm cautions that the infographic should be read carefully.

First, the figures are estimates, not an exact census of the blockchain.

River relies on a mix of wallet tagging, public disclosures and external databases, which may miss some holdings or misclassify certain addresses. Second, net inflows do not always equal direct spot buying. A business wallet showing +1,755 BTC per day could reflect OTC transactions, custodial transfers or treasury reshuffling, not just exchange purchases.

For readers unfamiliar with flow diagrams, the point is this: the lines show where coins are ending up on balance, not every trade or transfer in the system. If more coins consistently end up in business, fund and government wallets than miners are producing, River argues that institutions are tightening supply at the margin.

River’s snapshot is not a price forecast, but it illustrates how ownership patterns may be shifting. If businesses and funds continue to absorb more than miners produce, the firm argues, institutions could play a larger role in shaping bitcoin’s supply dynamics.

Bitcoin (BTC) grew to account for about 1.7% of global money, a figure that includes aggregate M2 money supply data for all major fiat currencies, the largest minor currencies, and gold’s market cap, according to River, a Bitcoin financial services company.

“In 16 years, Bitcoin went up to 1.7% of global money,” River said. The company weighed Bitcoin’s market cap against a $112.9 trillion basket of fiat currencies and $25.1 trillion in hard money, which excluded silver, platinum, and exotic metals like palladium.

The data assumes Bitcoin has a market capitalization of $2.4 trillion, which it topped earlier in August. However, BTC’s current market cap is approximately $2.29 trillion, which brings its total share of global money down to around 1.66% at the time of this writing.

Bitcoin and gold continue to claim a greater share of the global money pie as central banks around the world inflate their fiat currencies through excessive money printing, destroying purchasing power and driving investors to hard money alternatives.

Related: Crypto sentiment returns to Greed as Bitcoin and Ether spike on Fed speech

US Federal Reserve chair signals coming rate cuts and continued monetary expansion

United States Federal Reserve chairman Jerome Powell delivered a keynote address at the Jackson Hole Economic Symposium in Wyoming on Friday, signaling impending interest rate cuts and continued monetary expansion. Powell said:

“Our policy rate is now 100 basis points (BPS) closer to neutral than it was a year ago, and the stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance.”

The price of Bitcoin surged by over 2% in response to Powell’s speech, hitting a price of about $116,000 per BTC on Friday.

Bitcoin and other cryptocurrencies tend to appreciate during periods of monetary expansion, as the price of digital assets continues to correlate with global liquidity levels.

75% of investors now anticipate an interest rate cut of 25 basis points in September, according to data from the Chicago Mercantile Exchange (CME) Group.

Magazine: Baby boomers worth $79T are finally getting on board with Bitcoin

]]> https://earlybirdsinvest.com/btc-climbed-to-1-7-of-global-money-before-fed-chair-signaled-rate-cut/feed/ 0 54766 https://earlybirdsinvest.com/ethereum-surges-to-its-new-record-high-amid-a-high-possibility-of-interest-rate-cuts-in-september/ https://earlybirdsinvest.com/ethereum-surges-to-its-new-record-high-amid-a-high-possibility-of-interest-rate-cuts-in-september/#respond Sat, 23 Aug 2025 03:43:34 +0000 https://earlybirdsinvest.com/ethereum-surges-to-its-new-record-high-amid-a-high-possibility-of-interest-rate-cuts-in-september/

Crypto Journalist

Anas Hassan

Crypto Journalist

Anas Hassan

About Author

Anas is a crypto native journalist and SEO writer with over five years of writing experience covering blockchain, crypto, DeFi, and emerging tech.

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Last updated: 

August 22, 2025

ChatGPT’s Bitcoin analysis reveals a dramatic recovery to $116,859 following a sharp rally from $112,320 after Fed Chair Jerome Powell hinted at September rate cuts, despite facing $1.17 billion in ETF outflows and institutional selling pressure throughout the week.

At the same time, Bitcoin maintains a bullish structure above all major EMAs, including 20-day ($113,982), 50-day ($115,333), 100-day ($116,164), and 200-day ($115,943) support levels, positioning for a potential breakout toward $120K resistance despite momentum weakening signals.

Bitcoin shows a healthy RSI at 62.75 with MACD remaining bullish at 328.20 but a negative histogram at -903.78, indicating momentum exhaustion, while moderate 10.83K BTC volume suggests institutional participation during the Powell-driven recovery rally.

ChatGPT’s Bitcoin analysis synthesizes 25 real-time technical indicators to assess BTC’s trajectory amid Federal Reserve policy shifts and institutional distribution pressure while navigating altcoin outperformance and market rotation dynamics.

Technical Analysis: Powell Rally Tests EMA Support Structure

Bitcoin’s current price of $116,859.35 reflects a dramatic intraday recovery despite a -4.04% daily decline from the opening price of $112,320.01, establishing a volatile trading range between $116,988.00 (high) and $111,684.79 (low).

This 4.5% intraday range demonstrates extreme volatility following Powell’s dovish comments, triggering risk-on sentiment.

The RSI at 62.75 maintains healthy neutral-bullish positioning without oversold conditions, providing balanced momentum for potential continuation.

Moving averages reveal exceptional bullish positioning with Bitcoin trading above all major EMAs: 20-day at $113,982 (+2.5%), 50-day at $115,333 (+1.3%), 100-day at $116,164 (+0.6%), and 200-day at $115,943 (+0.8%).

MACD shows a strong bullish structure at 328.20, well above zero, with the signal line at -575.59, but a concerning negative histogram at -903.78 suggests significant momentum deterioration.

Volume analysis shows moderate activity at 10.83K BTC, indicating steady institutional participation during Fed-driven volatility.

ATR maintains extremely high readings at 113,152.27, suggesting massive volatility potential for continued significant moves in either direction based on policy developments.

Market Context: Fed Policy Shift Overrides Institutional Distribution

Bitcoin’s recovery follows Fed Chair Jerome Powell’s Jackson Hole comments hinting at September rate cuts, creating risk-on sentiment that overshadowed week-long institutional selling pressure.

The dovish pivot represents a fundamental catalyst as “markets respond at the hint of a rate cut” with potential for amplified moves upon actual implementation.

The broader context reveals institutional distribution challenges with Bitcoin ETFs facing $1.17 billion in outflows while major holders, including BlackRock and other institutions, have been systematically reducing positions.

Despite this selling pressure, Powell’s rate cut signals create renewed institutional interest in risk assets.

Altcoin outperformance demonstrates market rotation dynamics with Ethereum recovering above $4,800 and BNB achieving new all-time highs.

The 2025 trajectory shows resilience from February’s $84,373 low to current $116K levels, representing 38% appreciation.

Current positioning maintains proximity to July-August highs despite institutional selling.

Market Fundamentals: Strong Metrics Despite Distribution Pressure

Bitcoin maintains dominant positioning with $2.32 trillion market cap (+3.31%) despite institutional distribution challenges.

The market cap growth accompanies increased volume at $80.01 billion (+34.12%), indicating active institutional repositioning.

The 3.46% volume-to-market cap ratio suggests heightened trading activity supporting price stability during policy-driven volatility.

Circulating supply of 19.9 million BTC represents 94.8% of the maximum 21 million supply, with approaching scarcity supporting long-term value despite short-term distribution phases.

Market dominance of 61.40% shows slight weakness relative to altcoins during institutional rotation phases, while the -6.39% distance from August 14’s all-time high of $124,457 demonstrates proximity to recent peaks despite selling pressure.

Current pricing maintains extraordinary 239,486,002% gains from 2010 lows while trading near historic highs, validating Bitcoin’s institutional adoption trajectory despite temporary distribution pressures from ETF outflows and institutional profit-taking activities.

Social Sentiment: Exceptional Performance Amid Policy Catalyst

LunarCrush data reveals outstanding social performance with Bitcoin’s AltRank at #1 during Federal Reserve policy developments.

Galaxy Score of 90 reflects strong sentiment as participants process rate cut implications for risk asset positioning.

Engagement metrics show substantial activity with 5 million total engagements (-500K) while mentions surge to 500K (+100K), demonstrating heightened attention during policy catalyst events.

Social dominance of 43.06% maintains exceptional visibility while sentiment registers at a robust 80% positive despite institutional distribution.

Recent social themes focus on Powell’s dovish pivot, with community discussions emphasizing “false breakdown confirmed” and “inverse head and shoulders” technical patterns.

Notable analyst commentary includes predictions of $175K targets and comparisons to historical rate cut cycles, driving Bitcoin appreciation.

Prominent traders are also identifying double-bottom formations and potential for moves above $127K before Q3 ends.

ChatGPT’s Bitcoin Analysis: Fed Policy Catalyst Meets Technical Resistance

ChatGPT’s Bitcoin analysis reveals Bitcoin benefiting from Federal Reserve policy shift despite institutional distribution headwinds.

The recovery above all EMAs following Powell’s comments demonstrates monetary policy’s continued influence on Bitcoin positioning as a risk asset.

Immediate support emerges at the 20-day EMA around $113,982, followed by strong support confluence at 50-day ($115,333) and 100-day ($116,164) EMAs.

The layered EMA support structure provides substantial downside protection during policy-driven volatility phases.

Resistance begins at today’s high around $116,988, followed by psychological $120K–$122K levels.

Volume patterns and MACD signals suggest institutional positioning continues despite surface distribution, while extreme ATR readings indicate potential for significant moves matching Federal Reserve policy implementation phases and institutional rotation dynamics.

Three-Month Bitcoin Price Forecast: Policy-Driven Scenarios

Rate Cut Rally (50% Probability)

Successful September rate cut implementation combined with continued dovish Fed policy could drive Bitcoin toward $125K–$130K, representing 7–11% upside from current levels.

This scenario requires sustained institutional confidence and policy follow-through validation.

Distribution Consolidation (30% Probability)

Continued institutional profit-taking could result in consolidation between $112K–$120K, allowing distribution completion while monetary policy provides underlying support for risk asset positioning.

Technical Correction (20% Probability)

A break below $113K EMA support could trigger selling toward $108K–$110K levels, representing 7–10% downside.

Recovery would depend on the Federal Reserve policy acceleration and institutional distribution completion.

ChatGPT’s Bitcoin Analysis: Monetary Policy Catalyst Meets Distribution Phase

ChatGPT’s Bitcoin analysis reveals that Bitcoin is positioned for a potential policy-driven breakout despite institutional distribution pressures.

The combination of Fed dovish pivot with technical support above all EMAs suggests that monetary policy influence outweighs short-term selling pressure.

Next Price Target: $125K-$130K Within 90 Days

The immediate trajectory requires holding above $113K EMA support to validate policy catalyst strength over distribution pressure.

From there, the September rate cut implementation could propel Bitcoin toward $125K psychological resistance, with sustained dovish policy driving toward $130K+ breakout levels.

However, failure to hold $113K would signal extended consolidation toward $108K–$110K range, creating an accumulation opportunity before the next policy wave drives Bitcoin toward new all-time highs above $125K as monetary conditions become increasingly supportive.