ETF Inflows Spike Before Reversing
In September, U.S. spot Bitcoin exchange-traded funds (ETFs) experienced significant growth, attracting $2.65 billion in net inflows. This marks the second-highest monthly total since October 2025. Notably, most of this demand surged in the last two weeks of the month following the Federal Reserve’s interest rate hike during its September meeting.
Nevertheless, as attention turns to the decision set for October 28, the ETF flows in October have shifted to net outflows.
According to CME FedWatch statistics from October 15, the likelihood of maintaining current rates sits at approximately 68%, while the chance of an increase stands at around 32%. The Consumer Price Index for September reported a year-on-year increase of 3.7%, exceeding expectations, while core inflation registered at 2.6%.
The report highlights that the yield on 30-year Treasury bonds has risen to about 5.6%, a trend seen as a limiting factor for risk tolerance among investors.
Double Bottom Pattern Fails
Bitcoin’s recovery in the third quarter formed a technical pattern known as a double bottom, marked by a neckline around $82,000. Historically, a consistent close above this threshold would generally indicate a continuation of the upward trend. However, Bitcoin’s latest weekly closing value of $80,900 fell below this neckline, leaving the pattern unverified and the immediate outlook uncertain.
The proportion of Bitcoin supply currently in profit has increased from 46% at the June lows to around 69%, showcasing the extent of the Q3 rally. Furthermore, the report notes that in the last three Bitcoin market cycles, the asset typically reached its cycle low between 513 and 542 days prior to the halving event. When applied to the upcoming April 2024 halving, this indicates that the cycle low has already occurred.
Three Scenarios for Q4
Nexo’s analysis presents three potential outcomes for the remainder of the year. In the optimistic scenario, the Federal Reserve opts to maintain rates in October, long-term Treasury yields stabilize, and institutional interest through ETFs picks up again, potentially pushing prices above the $82,000 neckline.
The second scenario, characterized as the current trend, sees Bitcoin trading within a limited range as the market awaits clearer insights on interest rates and inflation.
The third scenario, identified as the most significant risk, involves either a rate increase or unexpectedly high inflation data, which could prompt a retreat from risk assets, reversing some of the Q3 gains.
Featured image courtesy of Nexo.