Bitcoin Climbs to $86,750 as Cooling Inflation Revives Rate-Cut Hopes and Spot ETFs Surge

Bitcoin was trading at $86,750 on Friday, marking a 3% gain over a 24-hour period and a 2% increase for the week, according to CoinGecko data. The upward movement follows a resilient September that defied the asset’s historical losing reputation for the month, even as prices remained roughly 31% below the all-time high set a year prior.

The renewed momentum in the cryptocurrency market closely tracks shifting macroeconomic expectations, particularly following Wednesday’s inflation reading. The August core Personal Consumption Expenditures (PCE) index came in at 3.0%, landing below the 3.3% rate anticipated by economists. The subsequent market repricing has significantly altered expectations surrounding the Federal Reserve’s upcoming policy decisions, swinging the odds heavily toward the central bank holding interest rates steady at its October 28 meeting.

According to the CME Group’s FedWatch tool, interest rate futures priced a policy pause at 74%, a sharp increase from 35.8% just a week prior. Similarly, traders on Myriad, a prediction market owned by Decrypt’s parent company Dastan, priced a rate hold at 75%. Iliya Kalchev, an analyst at Nexo, noted that this sentiment represents a dramatic shift from an even split between a hike and a hold as recently as September 29.

Federal Reserve officials have offered a measured tone regarding the trajectory of monetary policy. New York Fed President John Williams stated on Tuesday that there was "no need for urgency" following previous adjustments while keeping one more potential increase in his baseline outlook for later in the year. Meanwhile, Vice Chair Philip Jefferson remarked on Thursday that policymakers needed additional time to assess economic conditions, emphasizing that future adjustments should depend strictly on incoming data and the overall balance of risks.

According to Tim Sun of HashKey, persistently high Treasury yields had previously capped Bitcoin’s upside potential, but short covering quickly accelerated the buying pressure once prices successfully broke out of their previous trading range.

Broader economic indicators released throughout the week presented a mixed picture of the U.S. economy. Initial jobless claims dipped to 197,000 for the week ending September 26, reaching their lowest level since mid-July, while continuing claims fell to 1.7 million, marking the lowest figure since March 2023. Additionally, ADP private payrolls rose by 90,000, coming in comfortably ahead of market forecasts.

However, the official government employment report released on Friday painted a softer picture. The Bureau of Labor Statistics reported that nonfarm payrolls increased by just 29,000 in September, significantly lower than the roughly 90,000 jobs anticipated by economists. Furthermore, the national unemployment rate edged up to 4.2%. Revisions to the prior two months further underscored a cooling labor market, with July and August payroll figures revised downward by a combined 60,000 jobs—leaving July with a net loss of 10,000. Over the past year, average monthly job gains now stand at 45,000.

While analysts offered their commentary prior to the official employment release, a labor report of this softness reinforces the argument for the Federal Reserve to pause its rate hikes. At the same time, it revives central questions over whether the labor market is entering a definitive slowdown—a scenario the Fed has sought to avoid. September’s Consumer Price Index (CPI) report is scheduled to be released on October 14.

"Cooling inflation without labor weakness is generally supportive of risk assets, Bitcoin included," Kalchev explained.

Institutional interest has continued to provide structural support for the cryptocurrency. Spot Bitcoin exchange-traded funds (ETFs) recorded $2.65 billion in net inflows during September, trailing only August’s $3.52 billion haul for the highest monthly intake since October 2025. According to data from SoSoValue, total cumulative net inflows for the third quarter reached $6.34 billion, bringing total net assets across these funds to $109.3 billion. Kalchev noted that spot ETFs registered positive inflows on 10 out of the last 11 trading sessions, totaling approximately $3 billion.

This robust third-quarter accumulation helped offset significant outflows earlier in the year. Spot Bitcoin ETFs shed $4.97 billion during the second quarter and another $490 million in the first quarter, keeping total net inflows for 2026 below the $1 billion threshold before the summer rebound.

The sustained capital intake occurred despite a prior 25-basis-point rate hike and a 10-year Treasury yield hovering above 5%. Sun pointed out that this behavior demonstrates institutional capital is "not merely chasing liquidity, but are rather allocation-driven inflows." He highlighted that Morgan Stanley’s proprietary ETF took in more than $200 million last month, signaling that major investment banks’ wealth management systems are progressively incorporating Bitcoin into client asset allocation frameworks.

Market analysts hold varying views regarding current derivatives positioning and leverage. Kalchev observed that futures open interest has declined roughly 12% from its September 22 peak, placing it in the bottom decile of its one-year range. This indicates that the recent price advance is not overly reliant on speculative leverage. Conversely, Sun noted that open interest rose in tandem with rising prices. Options markets reflect a cautious yet constructive stance, with Kalchev pointing out heavy hedging protection clustered at $80,000 and below, alongside call options concentrated between $89,000 and $92,000.

Into Uptober

October and November have historically been among Bitcoin’s strongest calendar months, a seasonal phenomenon colloquially referred to by traders as "Uptober." Over the past decade, Bitcoin has generated an average gain of 18% in October and a 46% return across the fourth quarter as a whole, according to Stephen Wundke of Algoz.

"Traders feel there is more upside currently than there is downside," Wundke told Decrypt. "There is a welter of money sitting on the sidelines waiting for more positive figures. If we get those softer figures and no rate rise, BTC will move very quickly and drag the rest of the quality assets with it."

Nevertheless, macroeconomic risks persist. The 10-year Treasury yield remains near its highest levels since 2002, and the Federal Reserve’s official projections still leave room for another rate increase before the end of the year. Wundke estimates the probability of an October rate hike at 40%, a figure significantly higher than the 26% implied by current interest rate futures.

Other industry leaders urge caution despite seasonal tailwinds. Owen Yang, chief executive of digital payments platform UPay, noted that while continuous ETF inflows and ongoing regulatory developments regarding crypto custody from the Securities and Exchange Commission continue to advance the institutional narrative, buying at current price levels could potentially compress near-term upside momentum.

"Whether Uptober lives up to its name will depend on the macroeconomic environment and the Fed," Kalchev concluded, "and Bitcoin is actively pricing those outcomes."