Cryptocurrency markets staged a broad rebound Tuesday, with Bitcoin, XRP and Solana each rising at least 2%. Bitcoin climbed back above $111,000 after a week of sideways action, while Solana led the top-ten cohort with a weekly gain north of 7%.
Why this rally is happening
Traders and analysts point to three main drivers: growing odds of a Federal Reserve rate cut, a weakening U.S. dollar that has supported risk-on flows, and signs of conviction among institutional buyers. Bitget chief analyst Ryan Lee said the softer dollar has “bolstered risk-on sentiment and encouraged capital flows into assets like cryptocurrencies,” and noted markets are pricing in Fed rate cuts expected in September 2025.
On-chain signals reinforced the narrative. CryptoQuant analyst DarkFost highlighted a switch to positive net taker volume, saying traders are “leaning toward a short-term upside.” Meanwhile, a seven-day uptick in open interest—after a negative trend—often follows liquidations and has historically preceded price recoveries.
Derek Lim, head of research at Caladan, characterized the rise in open interest as “conviction-driven positioning rather than speculative excess,” pointing to Metaplanet’s purchase of 1,009 BTC on Monday as an example of data-backed buying.
What could change the outlook
The dominant macro event now is the U.S. jobs report. The CME FedWatch tool shows a 91.8% probability of a 25-basis-point cut at the Fed’s September meeting, but analysts warn that incoming data and Fed commentary can still flip sentiment.
Lim outlined two scenarios: a bullish outcome if Nonfarm Payrolls land between 90,000–120,000, which would reinforce rate-cut expectations and likely push Bitcoin higher; and a challenging outcome if payrolls exceed 150,000 or show wage pressure, prompting hawkish Fed messaging—even with a cut—and driving Bitcoin back toward the $104,000–$106,000 range with possible liquidations.
Investors should be cautious: rate-cut expectations have already been priced into futures and a hawkish post-cut statement from the Fed could trigger sharp volatility. Position sizing and stop-loss discipline remain important for traders exposed to derivatives.
In short, improving macro signals and institutional buying have pushed prices higher this week, but the upcoming jobs report and any hawkish Fed messaging could rapidly reverse gains. Source: Decrypt. Read the original coverage for full details.