Bitcoin News Today: Federal Funds Fears Fuel Bitcoin's ETF Surge

The cryptocurrency market is bracing for significant movements this week, as macroeconomic data and evolving Federal Reserve policy expectations continue to shape investor sentiment. With a shifting labor market and the potential for interest rate cuts, crypto assets are responding accordingly.

The U.S. unemployment rate reached 4.3% in October 2025, its highest level since October 2021, according to the Bureau of Labor Statistics. This rise has heightened expectations for a Federal Reserve rate cut scheduled for September 17, 2025, as analysts at Bank of America now anticipate a 0.25 percentage point reduction to the Federal Funds Rate. The firm, which had previously forecast no rate cuts in 2025, has revised its stance due to deteriorating job market conditions, with layoffs year-to-date through August totaling 892,362, a 66% increase year over year. The number of unfilled jobs has also dropped from over 12 million in 2022 to 7.2 million in July 2025, further indicating a cooling labor market.

While the Federal Reserve remains cautious due to inflationary pressures, recent data show the Consumer Price Index has risen to 2.7% as of July 2025 from 2.3% in April. This has led to a more balanced policy outlook, with market participants pricing in three quarter-point interest rate cuts by the December meeting, according to the CME Group’s FedWatch tool. Futures traders now see a roughly 65% chance of a 0.75 percentage point rate cut by December, up from 46% before the latest unemployment report. Analysts from Brandywine Global and ClearBridge Investments have noted the growing importance of labor market data in influencing Fed decisions, with the weakening employment trend seen as a key factor in accelerating rate-cut expectations.

The shifting monetary policy backdrop has directly impacted the cryptocurrency market. Spot Bitcoin ETFs experienced a reversal of momentum, with a net inflow of $301.3 million reported on September 3, while Ethereum ETFs saw sharp outflows, shedding $135.3 million. BlackRock’s iShares Bitcoin Trust (IBIT) led the inflows with $289.8 million in new capital, pushing its assets under management to $58.6 billion. In contrast, Ethereum ETFs, which had dominated inflows in August, are now witnessing a pullback, with BlackRock’s ETHA shedding $151.9 million. Despite this, Ethereum ETFs have still attracted a cumulative $13.34 billion in inflows for the year, with most of that concentrated in ETHA.

Bitcoin’s strong ETF performance is not the only sign of increased institutional interest. Metaplanet, a Japanese firm, has expanded its Bitcoin holdings to 20,000 BTC after purchasing an additional 1,009 BTC for $112 million. The firm has now become the sixth-largest corporate holder of Bitcoin, surpassing its initial 2024 accumulation target. Meanwhile, Trump-backed DeFi project World Liberty Financial (WLFI) launched spot trading for its token, with 25% of its supply currently available. The token debuted with a market cap of approximately $30 billion, signaling strong initial demand.

Institutional and whale activity in Ethereum has also remained robust, with large holders scooping up $620 million in Ether in recent weeks. This increased exposure contrasts with the recent ETF outflows and suggests sustained long-term confidence in the second-largest cryptocurrency. Analysts note that while Ethereum ETFs tend to underperform in September historically, institutional buying has helped offset some of the short-term selling pressure.

Looking ahead, the market will closely watch the upcoming August CPI and PPI reports, which could further clarify the Fed’s trajectory. Bank of America has modeled additional rate cuts in 2026, projecting a total of 1.25 percentage points of cuts through the end of next year, bringing the Federal Funds Rate to a range of 3% to 3.25%.

Source: [1] Bank of America announces huge shift in Fed rate cut forecast (https://www.thestreet.com/fed/bank-of-america-announces-huge-shift-in-fed-rate-cut-forecast) [2] Markets Bet on More Fed Interest Rate Cuts After Another Weak Jobs Report (https://www.morningstar.com/economy/markets-bet-more-fed-interest-rate-cuts-after-another-weak-jobs-report) [3] Spot Bitcoin ETFs Rebound, Trump-Backed WLFI Token Launches on Exchanges (https://www.gemini.com/blog/spot-bitcoin-etfs-rebound-after-eth-etfs-dominate-in-august-trump-backed) [4] Ethereum ETFs Bleed Amid $301M BTC Inflow, Yet Whales Scoop Up $620M in Ether (https://finance.yahoo.com/news/ethereum-etfs-bleed-amid-301m-210041289.html)