Bitcoin’s value has surged, surpassing US$123,000, representing a 30% increase year-to-date. It continues to rise alongside Ethereum, which is trading at over US$4,700.
The upward momentum persists despite the absence of new developments. Speculation about potential rate cuts by the Federal Reserve is contributing to the broader gains against the USD.
The Impact Of Rate Cuts
We are seeing this rally because the market expects the Federal Reserve to cut interest rates soon. A weaker dollar makes assets like Bitcoin more attractive. This view was strengthened when the July 2025 inflation data came in cooler than expected at 2.8%, increasing the odds of a September rate cut.
For options traders, this environment favors bullish strategies. The demand for calls is now outpacing puts, which we can see in the positive 25-delta skew for September and October contracts. Consider buying call spreads to capture further upside while clearly defining your maximum risk.
On the futures front, expect to pay to hold long positions as funding rates for perpetual swaps are staying consistently positive. This shows strong conviction from bulls, but be wary of using too much leverage. A market this crowded with longs can be vulnerable to a sharp, sudden correction.
This price action feels similar to the sustained rally we saw after the spot ETFs were approved back in 2024. We are again seeing significant net inflows into those products, with reports showing over $1.5 billion added in the last 30 days alone. This institutional demand provides a strong support level for the market.
Ethereum’s Fundamental Strength
Ethereum is also showing fundamental strength beyond just its correlation to Bitcoin. The total amount of ETH staked has recently climbed above 30% of the circulating supply for the first time. This lockup of supply reduces the amount available to sell and signals strong holder confidence.
The main risk to this trend is the Federal Reserve not following through with the anticipated cuts. All eyes will be on the upcoming Jackson Hole Symposium later this month for any change in tone from central bankers. A surprisingly hawkish message from the Fed could quickly reverse these recent gains.
