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Bitcoin’s direction now looks tied more to US rates and the dollar than to crypto-specific news, which makes Wednesday’s Fed minutes and this week’s US data key catalysts. Slowing ETF inflows point to cooling institutional demand, leaving the rally reliant on macro relief rather than fresh buying. Light leverage and normal funding rates reduce the risk of a forced-selling cascade, but they also suggest limited conviction behind the move. Oil is a swing factor too: another leg higher in crude would revive inflation and rate-hike fears, historically a headwind for the token.
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A year after its peak, bitcoin has learned the hard way that it answers to the bond market, and the Fed still holds the key to its recovery.
Summary:
- Bitcoin hit a record of about $126,000 on 6 October 2025 and now trades around $86,000, roughly 32% lower.
- Rate hikes, an oil shock and 10-year Treasury yields near their highest since 2007 have weighed on the token.
- A weak September payrolls report cut October Fed hike odds and lifted bitcoin about 3% last week.
- Spot bitcoin ETF inflows slowed sharply to around $80 million from about $2.4 billion the week before.
- Futures leverage is near this year’s lows, and Citigroup has raised its 12-month target to $113,000.
Bitcoin marks one year since its record high on Tuesday, trading around $86,000, roughly a third below the peak of about $126,000 it reached on 6 October 2025.
The decline leaves the world’s largest cryptocurrency needing a gain of almost 50% just to return to its high. The path from the peak has been a long slide followed by an extended sideways phase rather than a collapse, and bitcoin has recovered about 8% over the past month.
The backdrop explains much of the underperformance. The past year has brought an energy shock from the war in Iran, a renewed cycle of rate hikes and a sharp rise in borrowing costs. US 10-year Treasury yields climbed to around 5.3% last week, their highest since 2007. Higher risk-free returns raise the opportunity cost of holding an asset that pays no income, and bitcoin has tended to trade as a high-risk asset sensitive to liquidity rather than as a hedge against inflation.
That sensitivity was on display last week. US payrolls rose by just 29,000 in September, well short of expectations for 84,000, and markets cut the odds of an October Federal Reserve rate hike from around 70% to below 20%. Bitcoin rose about 3% on the week and briefly touched $87,000.
The quality of the rally is mixed. Inflows into US spot bitcoin exchange-traded funds slowed to around $80 million last week from roughly $2.4 billion the week before, suggesting institutional demand has cooled. At the same time, bitcoin futures open interest sits near its lowest level of the year and funding rates in perpetual futures have normalised, meaning the latest gains have not been driven by heavy leverage.
Some analysts see room for recovery. Citigroup last week raised its 12-month bitcoin price target to $113,000, still below the record but well above current levels. Technical analysts have also noted that bitcoin’s 50-, 100- and 200-day moving averages are moving towards their first fully bullish alignment since 2025.
Whether that recovery materialises is likely to depend less on crypto-specific news than on the macro picture, particularly the path of US rates, the dollar and oil prices. Minutes from the Fed’s latest meeting, due on Wednesday, are the next test.
This article was written by Eamonn Sheridan at investinglive.com.
