Bitcoin Targets Historic Monthly Close Amid Optimism Over US-China Deal and Fed Policy Shift
Bitcoin (BTC) is showing renewed strength as it eyes a potential record-breaking monthly close. The cryptocurrency surged to $116,000 amid rising investor optimism fueled by an anticipated US-China trade agreement and expectations of a Federal Reserve interest rate cut. As global financial markets rally, traders are closely watching BTC’s performance, hoping that the momentum will carry it past key resistance levels in the days ahead.
After a brief slump earlier in the month, Bitcoin has made a strong comeback, reclaiming $114,500 at the weekly close. This recovery aligns with bullish movements in the stock market, driven by easing tensions between the US and China over trade policies. Futures contracts on equities jumped after Washington signaled that a deal with Beijing was nearing finalization, with President Joe Biden scheduled to meet Chinese President Xi Jinping later in the week.
The renewed bullish sentiment is being further amplified by speculation that the Federal Open Market Committee (FOMC) will implement a 0.25% rate cut. Market participants are pricing in a more than 95% likelihood of this outcome, especially after the latest Consumer Price Index (CPI) report showed inflation coming in below expectations. With no additional inflation data available this week due to a government shutdown, the Fed’s decision will rely heavily on existing indicators and overall economic sentiment.
Technical analysts are closely monitoring Bitcoin’s movements around the 21-week exponential moving average (EMA) — a historically significant support level. Following a breakout from an ascending triangle on the daily timeframe, BTC has now established a critical foothold above this trend line. Analyst Rekt Capital highlighted this development as a positive signal for continuation, noting Bitcoin’s recovery from a macro-range low.
Despite the rebound, some traders remain cautious. Concerns persist about low trading volume and bearish divergences in key indicators such as the Relative Strength Index (RSI). Prominent trader Roman pointed to a potential head-and-shoulders pattern forming on higher time frames, which could signal a bearish reversal if BTC falls below the $109,000 neckline. Others, like chartist HTL-NL, described the current structure as an expanding triangle—suggesting the market remains undecided and more consolidation may be ahead.
Short-term holders are back in profit, a sign that the recent rally has brought relief to many who entered the market during previous peaks. This profitability trend is also a crucial psychological factor, potentially fueling further buying pressure as confidence returns. However, analysts caution that BTC has yet to test significant Fibonacci retracement levels, which could provide both resistance and support depending on the market’s next move.
Artificial intelligence-based models are now forecasting a potential push toward all-time highs near $125,000 before the end of the month. These projections, based on historical cycle behavior and network activity, add further optimism to the bullish narrative. Network economist Timothy Peterson, known for his research linking Bitcoin’s valuation to Metcalfe’s Law, emphasized that interest rate cuts and potential quantitative easing (QE) could act as major tailwinds for BTC.
Indeed, Peterson argues that Bitcoin’s price cycles are directly correlated with monetary policy. As the Fed pivots toward more accommodative measures, liquidity injections could drive further demand for decentralized assets like Bitcoin. “Interest rates are still too high, but QE is coming,” he stated, suggesting that macroeconomic forces are lining up in Bitcoin’s favor.
This week could prove pivotal for the broader crypto market. A combination of macroeconomic catalysts — including the Fed’s policy decision, corporate earnings reports from tech giants like Microsoft, Meta, and Amazon, and geopolitical developments around the US-China trade deal — has the potential to significantly impact Bitcoin’s trajectory.
Looking ahead, several technical and fundamental factors will shape Bitcoin’s short-term path:
1. Resistance at $116,000–$120,000: BTC must break through these levels to confirm its bullish trend and target new highs.
2. Volume Confirmation: A sustained rally needs to be accompanied by increasing volume to validate the move.
3. Investor Sentiment: On-chain metrics such as wallet growth and transaction volume will provide insight into underlying market conviction.
4. Derivatives Market Behavior: Liquidation levels and open interest data could be pivotal in determining volatility spikes and price direction.
5. Regulatory Landscape: Any unexpected shifts in policy or enforcement could quickly change market sentiment.
Moreover, historical seasonality favors Bitcoin in the fourth quarter. The term “Uptober” — coined from Bitcoin’s strong October performances in prior years — appears to be holding true once again after early-month weakness. If the current momentum continues, October 2025 could avoid the label of “worst October ever” and instead mark a turning point in BTC’s longer-term bull market.
For now, all eyes are on the Federal Reserve’s Wednesday announcement. Should policymakers opt for a dovish stance, Bitcoin could see another leg up, extending its rally into November and setting the stage for a potential breakout toward new all-time highs.
In summary, Bitcoin stands at a critical juncture. Macroeconomic tailwinds, a recovering technical structure, and growing investor optimism are all aligning. However, traders remain cautious, balancing hope with the reality of a still-fragile market structure. Whether Bitcoin can capitalize on these favorable conditions and close the month at record levels will depend on how this week’s major events unfold.