Bitcoin traded at $86,757 on Friday, marking a 3% increase over 24 hours and a 2% rise for the week, according to CoinGecko data. This surge follows a September that defied the month’s typical losing streak. However, the cryptocurrency remains approximately 31% below its all-time high set a year ago.
Inflation Data Fuels Fed Rate Hold Speculation
The recent price movement comes in the wake of Wednesday’s inflation report. August’s core Personal Consumption Expenditures (PCE) index registered 3.0%, falling short of the 3.3% expectation. The subsequent repricing of market expectations has significantly increased the likelihood of the Federal Reserve holding interest rates steady at its October 28 meeting. CME’s FedWatch tool indicates a 74% probability of a hold, a substantial jump from 35.8% a week prior. Traders on Myriad, a prediction market operated by Dastan, the parent company of Decrypt, are pricing the odds at 75%. Nexo analyst Iliya Kalchev noted to Decrypt that this shift occurred from an even split as recently as September 29.
Federal Reserve officials have signaled a cautious approach. New York Fed President John Williams stated on Tuesday that there was “no need for urgency” following September’s rate hike, though he still anticipates one more increase later in the year as part of his baseline forecast. Vice Chair Philip Jefferson echoed this sentiment on Thursday, emphasizing the need for policymakers to allow more time and for adjustments to be guided by data and the balance of risks. High Treasury yields had previously acted as a cap on Bitcoin’s price, but Tim Sun of HashKey observed that short covering contributed to buying momentum once the price broke its established range.
Mixed Economic Signals Emerge
Earlier in the week, jobless claims fell to 197,000 for the week ending September 26, with continuing claims dropping to 1.7 million, the lowest figures since March 2023. Additionally, ADP private payrolls rose by 90,000, exceeding forecasts.
However, Friday’s official jobs report presented a weaker picture. The Bureau of Labor Statistics reported that nonfarm payrolls increased by only 29,000 in September, significantly below the 90,000 expected. The unemployment rate also edged up to 4.2%. Revisions to July and August data showed a combined downward adjustment of 60,000 jobs, with July now reflecting a net loss of 10,000. The average monthly job gains over the past year now stand at 45,000. Analysts quoted prior to this report commented that such a soft print strengthens the case for a rate hold, while also raising a question the Fed has been trying to avoid: whether the labor market is showing signs of turning. The September Consumer Price Index (CPI) is scheduled for release on October 14. “Cooling inflation without labor weakness is generally supportive of risk assets, Bitcoin included,” Kalchev stated.
Spot Bitcoin ETFs See Strong Inflows
Spot Bitcoin Exchange-Traded Funds (ETFs) attracted $2.65 billion in September, second only to August’s $3.52 billion since October 2025. The third quarter saw total inflows of $6.34 billion, according to SoSoValue. The net assets of these ETFs currently stand at $109.3 billion. Kalchev highlighted that inflows were recorded on 10 of the last 11 trading sessions, totaling approximately $3 billion.
This strong quarterly performance largely offset earlier losses. The funds experienced outflows of $4.97 billion in the second quarter and $490 million in the first, leaving net inflows for 2026 under $1 billion.
The significant inflows occurred despite a 25-basis-point rate hike and a 10-year Treasury yield exceeding 5%. Sun noted that this indicates the money is “not merely chasing liquidity, but are rather allocation-driven inflows.” He added that Morgan Stanley’s ETF, which took in over $200 million last month, signals that “major investment banks’ wealth management systems are starting to incorporate Bitcoin into client asset allocation plans.”
Divergent Views on Market Positioning
Analysts hold differing views on current market positioning. Kalchev observes that futures open interest has decreased by about 12% from its September 22 peak and is in the bottom decile of its one-year range, suggesting the current advance is not heavily reliant on leverage. Conversely, Sun reports that open interest has risen as the price has climbed. Kalchev’s analysis of options data indicates “a market hedged against a drawdown but positioned for continuation,” with protection at $80,000 and below, and call options ranging from $89,000 to $92,000.
Historically, October and November have been Bitcoin’s strongest months, a phenomenon traders refer to as “Uptober.” Stephen Wundke of Algoz noted that October has averaged an 18% gain and the fourth quarter has averaged a 46% gain over the past decade. He told Decrypt that “traders feel there is more upside currently than there is downside.” Wundke added, “There is a welter of money sitting on the sidelines waiting for more positive figures. If we get those softer figures and no rate rise, BTC will move very quickly and drag the rest of the quality assets with it.”
Outlook Remains Dependent on Macro Factors
The 10-year Treasury yield is at its highest level since 2002, and the Fed still projects another rate hike this year. Consequently, a strong payrolls report or a higher-than-expected CPI could bring December back into play for a potential rate increase. Wundke estimates the chance of an October hike at 40%, a figure considerably higher than the 26% implied by current futures markets.
Owen Yang, chief executive of payments platform UPay, expressed a more cautious outlook. While ETF flows and the SEC’s work on custody continue to support the institutional case, he told Decrypt that “institutions entering at these price levels could mean less upside momentum.”
“Whether Uptober lives up to its name will depend on the macroeconomic environment and the Fed,” Kalchev concluded, “and Bitcoin is actively pricing those outcomes.”
