Bitcoin's ETF Surge and Fed Speculation Fuel $116K Rally Outlook

Bitcoin’s price action in late August and early September 2025 has drawn significant attention from traders and analysts as the cryptocurrency tested key resistance levels around the $110,000–$112,000 range. As of September 4, 2025, Bitcoin closed at $110,723.60, with a market cap of $2.21 trillion and a 24-hour trading volume of $60.13 billion. The price has shown a moderate recovery after a pullback in early August, during which it briefly dropped below $108,000 before stabilizing and showing signs of renewed institutional interest.

One of the most prominent drivers of Bitcoin’s recent performance has been the continued inflow of capital into spot Bitcoin ETFs. Despite a single net outflow on September 4, the broader trend indicates robust institutional demand, with U.S.-based ETFs attracting nearly $10 billion in capital since May 1, according to Farside Investors. Analysts suggest that this inflow is less tied to short-term price volatility and more reflective of long-term macroeconomic positioning, particularly among large investors.

A key factor fueling this bullish scenario is the potential shift in U.S. Federal Reserve policy. Crypto strategist Markus Thielen of 10x Research has highlighted the growing influence of political discourse on monetary policy, noting that Donald Trump’s criticisms of current Fed Chair Jerome Powell could foreshadow a more dovish stance under a potential new administration. Historical parallels, such as the inflationary period in the 1970s under Arthur Burns’ tenure, suggest that lower interest rates and accommodative policies could favor Bitcoin’s price trajectory.

Simultaneously, on-chain data reveals another bullish signal: a sustained decline in Bitcoin balances held on centralized exchanges. As of late August, exchange-held Bitcoin had seen 98 consecutive days of net outflows, the longest such drawdown since 2020. This trend, according to Thielen, suggests growing scarcity and heightened demand, with such patterns historically preceding major price surges.

The convergence of these macroeconomic and on-chain factors has led some analysts to predict that Bitcoin could target $116,000 by the end of September 2025. At current levels, a move to $116,000 would represent a 6.45% increase and surpass Bitcoin’s previous all-time high of $111,970. While this scenario remains speculative and contingent on evolving market conditions, the alignment of ETF demand, potential Fed policy shifts, and declining exchange reserves creates a compelling backdrop for further upward movement.

From a broader perspective, Bitcoin’s price dynamics appear increasingly tied to global liquidity trends, as illustrated by the strong historical correlation between Bitcoin and global M2 money supply growth. Data from central banks across the U.S., China, Europe, and other key regions indicate that increased liquidity has historically coincided with Bitcoin bull markets. With global liquidity continuing to rise, and Bitcoin lagging in its response by historical patterns of 60–70 days, analysts suggest that the next phase of price appreciation may be on the horizon.

In summary, Bitcoin’s recent price action and macroeconomic environment suggest a potential breakout above $116,000 in the coming weeks. While the market remains highly volatile and subject to rapid shifts in sentiment, the combination of ETF inflows, political-driven policy speculation, and dwindling exchange balances provides a strong case for cautious optimism. Investors are advised to monitor key resistance levels and broader macroeconomic developments as the market continues to evolve.