Dispatch #262: Here’s how the Fed could boost Bitcoin

In this patch of your weekly Dispatch:

ETH dominates stablecoins
A crucial inflation report
Textbook BTC dip-buying

Market cast

BTC: Technical leans bullish against resistance

Bitcoin’s technical picture leans cautiously bullish, though a clear trend has yet to establish itself. On the weekly chart, the Relative Strength Index (RSI) and Stochastic oscillator, both measures of momentum, remain in neutral territory, suggesting neither overbought nor oversold conditions. The Moving Average Convergence Divergence (MACD)histogram is hovering just below zero, reflecting subdued but stabilizing momentum, while the Average Directional Index (ADX) is edging toward 25, a threshold that typically signals whether a strong trend is developing.

The daily chart, meanwhile, offers a firmer tone: RSI is climbing, the MACD histogram is decisively positive, and Stochastic has entered the overbought zone—often associated with strong momentum rather than an automatic reversal. Still, the low ADX reading implies that conviction behind the move is limited for now.

Price-wise, immediate resistance lies at $116,000, with a breakout potentially opening a path toward $120,000, while support is holding at the 50-day exponential moving average (EMA) near $113,500, reinforced by the $110,000–112,000 zone.

The Big idea

The Fed’s rate cuts: Will history repeat for Bitcoin?

The Setup: In our last Dispatch, we explored potential catalysts for a market-wide bull run. Today, we narrow the lens to Bitcoin itself — and how the September 17 Fed rate cut could shape its path as the leading digital asset.

Markets have practically priced the outcome already: a 25 bps cut carries 94% odds via CME FedWatch, with prediction markets close behind at 88%. The move itself isn’t a surprise. The real story is the context: the S&P 500, Bitcoin, and gold all hovering near all-time highs while core inflation remains above 3.1% and labor market revisions quietly erased around 911,000 jobs. The Fed is easing into strength — even as early signs of strain emerge. Analysts at BofA expect this week’s cut to be followed by a pause until December, warning that sticky inflation above 3% will make any easing cycle “no walk in the park.” By contrast, our own community suggests back-to-back cuts in September and October — a more aggressive path that would mark a notable divergence from the cautious analyst consensus.

Crypto’s playbook: For Bitcoin, Fed pivots tend to amplify the macro backdrop. In 2019’s mid-cycle “insurance” cuts, BTC rallied from ~$7,000 to $12,000 as liquidity seeped back into markets. In 2020’s panic cuts, crypto fell with equities before staging an even stronger rebound once confidence returned. Today looks more like 2019: a soft-landing attempt where Bitcoin leads, Ethereum follows, and quality alts trail — only with sharper swings.

Market positioning: Traders have eased up on hedging for a drop. Demand for downside protection in options has cooled, hinting at reduced fear. If Powell sticks to the expected 25 bps cut, the likely outcome is a measured grind higher. A 50 bps surprise could trigger a sharper rally across Bitcoin, Ethereum, and even gold. Still, Powell’s tone and the Fed’s dot plot will steer near-term reactions more than the cut itself.

The big(ger) idea: History leans bullish: in the three months following rate cuts, Bitcoin has risen about 62% of the time, with average gains of 16.5%. Longer-term, models mapping Bitcoin to gold’s trajectory see targets near $700,000 by 2035. The Fed’s pivot may not deliver instant fireworks, but it tilts the playing field in Bitcoin’s favor. For now, the bias points upward — yet the path is layered with complexities, from sticky inflation to fragile labor dynamics. In that tension lies Bitcoin’s edge: it thrives not on certainty, but on the cracks in the old framework.

Ethereum

ETH’s strongest cycle?

Ethereum is back above $4,600 after a 7% weekly rise, and CryptoQuant says it could be entering its strongest cycle yet — here’s why. More than $3.7 billion in ETH is queued for staking, the busiest validator entry line in two years, while Ethereum’s stablecoin supply has surged to a record $166 billion, cementing its role as DeFi’s settlement layer. The ETH/BTC ratio sits at 0.039, still well below its 2017 peak of 0.14, but that underperformance leaves room for Ethereum to catch up if its structural demand keeps accelerating. With staking, stablecoins, and ETFs all converging, the path toward $5,000 looks increasingly grounded in fundamentals — and a turn in the ETH/BTC ratio could be the catalyst that unlocks the next phase of the cycle.

TradFi Trends

$7.5T on the sidelines – will crypto rise?

U.S. money market funds have hit a record $7.5 trillion, underscoring just how much capital is sitting idle. With the Fed poised to cut rates, the safe yields that drew cash into these funds are set to shrink, pushing investors to seek out higher returns.

That shift doesn’t need to be dramatic — even a modest rotation of this “dry powder” into risk assets could add serious fuel to rallies in tech stocks and Bitcoin. As history shows, when safe havens lose their shine, liquidity tends to flow toward growth. With financial conditions about to ease, markets may soon find out how quickly this cash mountain moves.

Hot in crypto

Solana’s treasury boom

Solana is up a healthy 10% on the week — and there’s good reason for it, with signs that more could be coming. Galaxy Digital has gone on a Solana buying spree, snapping up over 6.5 million SOL worth $1.55 billion in just five days, including a single-day haul of $306 million. The purchases, linked to a new crypto treasury initiative with Multicoin Capital and Jump Crypto, highlight a trend of firms positioning Solana as a balance-sheet asset.

Treasury companies are quickly becoming a Solana story of their own. Forward Industries has pivoted to building one of the largest corporate SOL holdings, while others have raised billions for the same strategy. Meanwhile, Solana’s fundamentals are strengthening too: total value locked on its DeFi ecosystem has hit a record $12 billion, second only to Ethereum. With corporate treasuries and on-chain liquidity both surging, Solana’s rally may just be warming up.

The week’s most interesting data story

A new ATH for BTC in 2025?

Bitcoin’s options market has matured into a central arena for risk management — and it’s now flashing where traders see the next big move. Open interest is at record highs, with calls dominating over puts, pointing to a market tilted bullish while still hedged against downside. Implied volatility has trended lower, reflecting deeper liquidity and steadier price action than in past cycles. Put together, options traders are signaling confidence that Bitcoin will hold higher ground — with year-end 2025 positioning clustering around the $140,000 mark as the most likely destination.

The numbers

The week’s most interesting numbers

$38.6 billion — Altcoin open interest, surging toward Bitcoin’s $40 billion, a sign of leveraged bets building ahead of the Fed.
12 million — Daily Ethereum smart-contract calls hit an all-time high, marking the heaviest on-chain activity ever recorded.
1,000,000,000,000,000,000,000 — Bitcoin’s hashrate crossed one zetahash per second, a milestone that makes the network the most secure computing system on earth.
12.3% — Institutions now control 2,595,000 of Bitcoin’s 21,000,000 total supply, a structural shift tightening the asset’s float.
$10.7 billion — BitMine’s total crypto holdings, anchored by 2.15M ETH, making it the largest corporate Ethereum treasury.

Hot topics

What the community is discussing

BTC ETFs’ back on track.

$114,000 seems to be the make-or-break level.

BTC’s getting more popular by the year.

N.B.: Next week’s Dispatch will be sent on Wednesday, September 24, instead of Tuesday.

Dispatch is a weekly publication by Nexo, designed to help you navigate and take action in the evolving world of digital assets. To share your Dispatch suggestions and comments, email us at [email protected].