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October 3, 2025

Bitcoin Surges Past $118,000 as Fed-Cut Odds Weigh on the Dollar

Market snapshot

Bitcoin climbed above $118,000 following a >5% rally, closing north of $118,500 with a daily RSI around 62 and a bullish MACD crossover. The move coincided with >$675.8M in spot Bitcoin ETF inflows for the third consecutive day, a Metaplanet buy of 5,268 BTC and exchange reserves falling to roughly 2.4M — the lowest since 2018. At the same time, softer US labor signals (ADP -32,000 private payrolls) and CME FedWatch pricing (implying >99% odds of two Fed cuts by year-end) weakened the US dollar and created favorable tailwinds for risk assets.

Why this matters

The combination of sustained institutional inflows, depleted exchange reserves and a softer USD is a textbook bullish setup for BTC: fewer coins on exchanges reduce immediate sell pressure while dollar weakness improves liquidity and demand for crypto. Seasonality also favors traders—October has historically been supportive for Bitcoin (gains in 10 of the past 12 Octobers).

Key drivers

ETF and institutional demand: Continued spot ETF inflows (three consecutive days) and large block purchases by institutions like Metaplanet increase on‑chain accumulation and buy-side liquidity.

Macro backdrop: ADP’s negative surprise and the temporary delay/pausing of US jobs releases have pushed Fed-cut odds higher, pressuring the DXY and supporting risk-on flows into crypto and commodities.

Technicals: BTC cleared short-term resistance near $117,500–$118,500 and is now testing the psychological $120,000 level. Momentum indicators (RSI ~62, bullish MACD) suggest room to run but also signal that momentum-led moves can be followed by quick pullbacks.

Technical outlook — BTCUSD

Upside targets: a decisive break and hold above $120,000 would likely open the path to the all-time high area near $124,474. Downside risk: a failure at $120k or a reversal in USD sentiment could prompt a pullback toward daily support around $116,000. Rapid positioning and leverage elevate short-term volatility.

Support & resistance

Immediate support: $116,000–$117,500. Immediate resistance: $120,000, then ATH region ~$124,474.

Trading implications and strategy ideas

Short-term traders: consider scaled entries and tight risk controls. Momentum traders may look for a clean close above $120k on higher volume as a continuation trigger. If momentum fades, reactive buys near $116k with stop-losses beneath the support region could offer favorable risk/reward.

Swing traders / investors: sustained ETF flows and low exchange reserves argue for a constructive medium-term bias, but position sizing should reflect macro uncertainty (Fed guidance and potential data surprises).

Risk factors to monitor

1) Reversal in Fed-cut expectations or stronger US labor data would strengthen the USD and could rapidly reverse BTC gains. 2) ETF inflows may slow or institutional buyers could pause, increasing downside pressure if exchange reserves rebuild. 3) Elevated short-term positioning increases the chance of sharp volatility, which can be amplified for leveraged traders.

Cross-market context — the dollar (DXY)

USD strength/weakness is the dominant macro swing factor for risk assets. With CME pricing showing high probability of Fed easing this year, the DXY has softened—supporting crypto upside; see a recent FX example of dollar weakness. Traders should watch upcoming US data and Fed commentary closely, as shifting expectations will likely translate into large, quick moves in BTCUSD.

How traders can use technology

Given the speed and volatility of this move, many traders are using automated trading and algorithmic strategies to manage entries, exits and risk. For Bitcoin-specific execution and position management, consider pairing strategy ideas with a Bitcoin Trading Bot or, for discretionary traders who want hybrid automation, the Trade Assistant Bot can help execute strategy rules while keeping the trader in control.

Practical checklist

  • Define stop-loss levels around $115–116k if long.
  • Use scaling to manage position size as BTC approaches $120k.
  • Monitor ETF flow reports and exchange reserve metrics daily.
  • Watch USD reaction to upcoming data and Fed communications.

Conclusion

Bitcoin’s breakout above $118,000 is supported by strong institutional inflows, depleted exchange reserves and a macro backdrop dominated by rising Fed-cut odds—factors that favor further upside toward $120,000 and potentially a retest of the record high. However, the trade is not without risk: a USD repricing or slowing inflows would increase the likelihood of a pullback to daily supports near $116,000. Whether you trade crypto or forex, disciplined risk management and the right tools for automated trading can help manage fast moves and volatility.

Try advanced automation and position management tools at PlayOnBit to put rules-based execution to work.