Bitcoin and other major cryptocurrencies saw notable gains on Tuesday morning, largely propelled by anticipation of an impending rate cut from the Federal Reserve. Market observers have pointed to a confluence of factors contributing to this positive uptick, including a weakening U.S. dollar and the recent acquisition of 1,009 BTC by Metaplanet. Additionally, an increase in open interest has sparked optimism across the crypto space.
This week’s recovery in the cryptocurrency market marks a compelling attempt to break free from a persistent downtrend that has characterized the market since mid-August. Analysts suggest that macroeconomic improvements and positive on-chain metrics are key elements of this resurgence. According to data from CoinGecko, Bitcoin, XRP, and Solana have all experienced increases of at least 2%, pushing Bitcoin’s price above $111,000 for the first time since the previous Friday. Although Bitcoin has only seen a slight weekly increase of around 1% as of the latest reports, Solana has surged more than 7% over the same period. Other major cryptocurrencies, including Ethereum, Dogecoin, and BNB, continued to show minor declines.
Ryan Lee, chief analyst at Bitget, indicated that the weakening U.S. dollar has fostered a risk-on sentiment, encouraging investors to funnel capital into assets like cryptocurrencies. He observed that prevailing macroeconomic trends are amplifying this behavior, with markets increasingly factoring in potential Federal Reserve rate cuts anticipated for September 2025. Such cuts would diminish the opportunity costs associated with holding non-yielding assets.
DarkFost, a pseudonymous verified analyst at CryptoQuant, reported that net taker volume has turned positive, indicative of a trader bias toward short-term upside. The overnight increase in Bitcoin’s open interest, which has seen a negative threshold shift, traditionally signals a liquidation of positions, usually followed by favorable market reactions. Derek Lim, head of research at Caladan, explained that this rise in open interest reflects conviction-driven positioning rather than speculative behavior, with Metaplanet’s BTC acquisition serving as a notable example.
Market consensus around a Federal Reserve rate cut on September 17 appears to bolster this sentiment, with the CME’s FedWatch tool indicating a 91.8% probability of a 25-basis-point reduction. However, Lim cautioned that current market attitudes may reflect reactive futures pricing rather than a comprehensive understanding of the complexities of the Federal Reserve’s decision-making process. He underscored the importance of the upcoming Nonfarm Payrolls report, scheduled for release this Friday, as a pivotal factor in assessing the market’s optimistic outlook.
A favorable jobs report, landing within the 90,000 to 120,000 range, would likely indicate a cooling labor market, enhancing the case for a rate cut and potentially propelling Bitcoin higher. Conversely, should the report exceed 150,000 or showcase wage pressures fueled by tariffs, the Fed may be compelled to either delay rate cuts or issue hawkish guidance, even in the event of a rate cut. In this worst-case scenario, Bitcoin could retreat to the $104,000-$106,000 range, creating conditions for significant liquidations.
Lim reiterated that the current market sentiment might be overly confident, warning that the Fed could deliver a more hawkish tone even in the face of rate cuts. Such a scenario could lead to heightened volatility for those markets that are anticipating a softer monetary policy pivot. As the landscape develops, market participants will be closely monitoring macroeconomic indicators to gauge the sustainability of the cryptocurrency rally.
