Bitcoin's Sentiment Rebound: A Strategic Buy Opportunity Amid Easing Fear and Fed Rate Cuts

The Bitcoin market is undergoing a seismic shift in October 2025, driven by a confluence of geopolitical détente and monetary policy easing. After a volatile start to the month marked by a historic flash crash, Bitcoin has clawed back to levels above $113,500, fueled by a U.S.-China trade agreement that has recalibrated global risk appetite. Meanwhile, the Federal Reserve's pivot toward rate cuts has injected fresh liquidity into risk assets, with Bitcoin ETFs attracting record inflows. For contrarian investors, this represents a rare alignment of macroeconomic catalysts and sentiment-driven rebounds-a setup that historically precedes prolonged bull cycles.

The U.S.-China Trade Agreement: A Geopolitical Catalyst

The October 2025 trade agreement between the U.S. and China has emerged as a pivotal turning point for Bitcoin. By suspending 100% tariffs and rare earth export restrictions, the deal has alleviated fears of a global supply chain crisis, directly boosting investor confidence in risk assets, according to Bitget's coverage. U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng both emphasized the agreement's "mutual benefit" framework, signaling a thaw in tensions that had previously weighed on markets.

Bitcoin's price surge followed swiftly, with the asset breaking through key psychological resistance levels after the flash crash. This resilience has been amplified by the performance of pro-crypto equities like American Bitcoin Corp (NASDAQ: ABTC), whose stock has mirrored Bitcoin's trajectory. The Trump family's involvement in ABTC and the broader pro-crypto stance of the U.S. administration have further stoked bullish sentiment, as shown by American Bitcoin Corp stock.

Fed Rate Cuts: A Liquidity Tsunami for Risk Assets

The Federal Reserve's October 2025 rate cuts-lowering the federal funds rate to 3.75%-4%-have created a liquidity tailwind for Bitcoin and other risk assets, Forbes reported. With money market funds (MMFs) holding $7.39 trillion in assets, even a modest 10% shift into equities and crypto could inject $739 billion into markets by 2026, according to a CoinPaprika analysis. This liquidity surge is already evident in Bitcoin ETF inflows: BlackRock's IBIT alone attracted $3.5 billion in early October 2025, pushing its total assets near $100 billion, per CoinPaprika's reporting.

Analysts project that a 5% shift of MMF assets could propel Bitcoin toward $280,000-$350,000, though bonds may initially absorb more capital due to their perceived safety, per CoinPaprika's estimate. The Fed's dovish pivot, combined with declining U.S. Treasury yields (now below 4%), has historically correlated with Bitcoin's bull phases, suggesting a prolonged growth cycle, according to a Coinotag analysis.

Contrarian Opportunity: Buying the Fear, Not the Hype

The recent volatility-marked by the flash crash and subsequent rebound-has created a contrarian entry point for investors. While mainstream media fixates on short-term swings, the underlying fundamentals are robust:
- Geopolitical stability via the U.S.-China agreement.
- Monetary easing from the Fed, reducing the opportunity cost of holding Bitcoin.
- Institutional adoption through ETFs, which have normalized Bitcoin's inclusion in diversified portfolios.

However, risks remain. If trade negotiations collapse or labor data surprises to the upside, volatility could resurge, as Bitget and other outlets have warned. Yet, for investors with a 12-18 month horizon, the current environment offers a strategic inflection point. The upcoming Trump-Xi summit in South Korea, expected to finalize the trade framework, could further solidify this bullish narrative (Bitget's initial coverage highlighted the diplomatic momentum).

Conclusion

Bitcoin's sentiment rebound in October 2025 is not a fleeting rally but a structural shift driven by macroeconomic tailwinds and geopolitical pragmatism. For investors who have historically avoided Bitcoin during periods of fear, the current alignment of catalysts presents a compelling case to buy the dip. As liquidity from Fed rate cuts and geopolitical stability converges, Bitcoin's trajectory toward $280,000-$350,000 appears increasingly probable-provided the trade agreement holds.