Crypto market eyes extended bull run as Fed rate cuts, ETF hopes fuel optimism

The crypto market could be bracing for a continued bull run, despite the recent events that have hit the sector. Part of the drivers of this optimism is the speculation that the Federal Reserve would be cutting interest rates in September after the Fed Chair, Jerome Powell, gave hints of that happening. 

Another driver is coming from the regulatory part, as US regulators are also considering the approval of the first wave of altcoin exchange-traded funds. Many traders believe the lull of recent months is about to give way to a new rally heading into autumn and winter 2025.

CryptoQuant analysts pointed out that the share of Bitcoin held for more than a year has reached levels usually seen near the end of cycles. Unlike in the past, however, the upward slope is flattening, a sign that the cycle may last longer.

Institutional adoption and the popularity of spot ETFs are part of the reason. “Any additional corrections could present an attractive opportunity,” the analyst said.

Rate cuts fuel market risk appetite

Hints from Fed chair Jerome Powell that the central bank is ready to ease policy have stoked expectations that America’s long stretch of high interest rates could be ending. Inflation has cooled, growth is slowing, and investors are betting the Fed will finally act.

A softer dollar and looser conditions make riskier assets more attractive, and digital tokens have historically rallied when rates come down. So when Powell last hinted at cuts earlier this summer, Bitcoin and Ethereum both jumped almost instantly.

However, the market has not been without turbulence. Bitcoin is down about 4.6% this month, trading near $110,500, showing that even in an optimistic environment, volatility remains part of the story.

ETFs will stir the next wave

Another reason for hope lies with regulators. After greenlighting Bitcoin spot ETFs in early 2024, the Securities and Exchange Commission (SEC) is now reviewing more than 70 applications for altcoins. Solana, XRP, and even Dogecoin are among the tokens under consideration, with decisions possible as soon as October.

Bitcoin ETFs brought billions in institutional inflows within weeks of launch. A similar move for altcoins could transform liquidity and pricing for a range of assets beyond Bitcoin and Ethereum.

Signs of change on-chain

According to CryptoQuant, the average size of deposits hitting Binance, long seen as a retail-heavy exchange, has soared. In early 2024, the average was less than one Bitcoin. Today, it stands above 14. That shift suggests that whales are now more active on the platform, taking positions for what could be the next big move.

Also, large block trades show investors buying December call spreads on Bitcoin, essentially betting on prices reaching as high as $160,000 by the end of the year. Ethereum options markets are also heating up, with heavy activity around the $4,800 level, hinting at confidence in further gains for the second-largest token.

But not every signal points upward. Technical charts are flashing warnings, including a bearish divergence on Bitcoin’s 14-month Relative Strength Index. “The cycle is slower, but longer,” CryptoQuant concluded. “This is a different kind of market, with institutions and nations now part of the equation.”

Corrections may come, but if the catalysts fall into place, the cold winter months of 2025 could feel very warm indeed for the crypto faithful.

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