Bitcoin's Sensitivity to Federal Reserve Policy: Diverging Bank Forecasts and Risk-On Sentiment

The Federal Reserve's monetary policy has long been a critical driver of Bitcoin's price action, with rate cuts historically acting as a tailwind for risk-on assets. In 2025, diverging forecasts from major banks like Barclays and Macquarie on the timing and magnitude of Fed rate cuts have created a nuanced environment for Bitcoin positioning. These divergences—ranging from expectations of three 25-basis-point cuts (Barclays) to just one (Macquarie)—highlight the uncertainty surrounding monetary easing and its implications for crypto markets.

Diverging Forecasts and Risk-On Dynamics

Barclays revised its 2025 rate cut forecast in September 2025, shifting from an initial expectation of three cuts (September, October, and December) to a more cautious stance of one 25-basis-point reduction in DecemberMajor Banks Revise Fed Rate Cut Forecasts for 2025, Pointing to September Start^[1]. In contrast, Macquarie maintained its projection of two cuts, scheduled for September and DecemberBarclays Revises Fed Rate Cut Forecast to One in December 2025: Impact on Bitcoin and Crypto Market^[2]. This divergence reflects broader disagreements about the Fed's response to inflation, labor market weakness, and global economic risks.

Such uncertainty directly impacts Bitcoin's risk-on sentiment. When banks like Barclays signal delayed or reduced rate cuts, the U.S. dollar often strengthens, compressing liquidity and dampening speculative flows into high-risk assets like BitcoinFed Rate Cut 2025: What It Means for Crypto Investors^[3]. Conversely, forecasts for earlier or more aggressive easing (as seen with Macquarie) typically weaken the dollar, incentivizing capital reallocation into crypto and other risk assets. For example, the September 2025 rate cut—executed as a 25-basis-point reduction—coincided with a 20% surge in Bitcoin ETF inflows, reaching $2 billion in a single monthBitcoin ETFs see $2 billion inflow as institutional interest reignites^[4]. This underscores how market participants price in Fed policy shifts, even as divergent forecasts create short-term volatility.

Positioning Metrics: ETFs, Open Interest, and Institutional Behavior

Bitcoin's positioning metrics in 2025 reveal a clear link between Fed rate cut expectations and capital flows. U.S. spot Bitcoin ETFs experienced a dramatic reversal in September 2025, with inflows surging to $368 million on September 9—the highest since August 8—following the Fed's dovish signalsBitcoin ETFs Draw In $368M, Showing Strongest Demand Since^[5]. This contrasts sharply with Ethereum ETFs, which saw $550 million in outflows during the same period, reflecting a rotation toward Bitcoin as a perceived safer haven in a risk-on environmentBitcoin Holds Steady as ETF Inflows, US Policy, and Fed Outlook Shape Next Move^[6].

Open interest in Bitcoin derivatives also expanded during this period, with perps funding rates and 25 Delta Skew metrics indicating heightened bullish positioningBy The Numbers: Key Bitcoin Metrics, Cycles, and Macro Positioning^[7]. Institutional investors, including Barclays, further amplified this trend by increasing exposure to Bitcoin ETFs. A 13F filing revealed Barclays' $131 million stake in BlackRock's iShares Bitcoin Trust (IBIT) in Q4 2024, signaling growing institutional confidenceBarclays reports $131m exposure to BlackRock’s Bitcoin ETF^[8].

Macroeconomic Context and Contradictory Signals

While the Fed's September 2025 rate cut provided a near-term boost to Bitcoin, broader macroeconomic risks temper its upside. Persistent inflation concerns and stagflationary pressures—highlighted by Barclays' revised forecasts—could limit the duration of risk-on ralliesBarclays Revises Fed Rate Cut Forecast to One 25 Bps Cut in December After US-China Trade Deal^[9]. Additionally, the market's partial pricing of rate cuts (e.g., the 80% probability assigned to the September cut) suggests that post-announcement price surges may be muted, as seen in the “sell-the-news” dip observed in early October 2025What the Fed’s Sept. 17 Interest Rate Decision Means^[10].

Conclusion: Navigating Divergence in a Volatile Regime

Bitcoin's sensitivity to Fed policy in 2025 underscores the importance of monitoring divergent bank forecasts. While earlier or more aggressive rate cuts (as per Macquarie) tend to bolster risk-on sentiment and ETF inflows, delayed or reduced easing (Barclays' revised stance) introduces dollar strength and short-term headwinds. Investors must balance these signals with macroeconomic realities, such as inflation trends and regulatory developments, to navigate the volatile landscape.