Inflation Sets Stage for Bitcoin Rally as Fed Rates Seen Falling to 2.75% by Oct 2026 đŸ“‰đŸ’„

U.S. inflation rose to 3.0% YoY in September, yet markets expect the Federal Reserve to begin cutting rates soon. Futures place a 90% chance of a 25 bps cut at the Oct 29 FOMC, lowering the target rate toward 3.5–3.75%, with projections pointing to around 3% by next year and 2.75–3.25% by Oct 2026.

Economists, including Goldman Sachs, forecast gradual easing as inflation cools, though persistent core inflation could keep real yields higher. A slower decline in long-term yields (~4%) may limit how much financial conditions loosen overall.

For crypto markets, falling rates and easing liquidity could trigger a “Bitcoin melt-up”, as lower real yields historically boost demand for risk assets. Bitcoin ETFs saw record inflows of nearly $6B in early October when BTC hit $126K, before mild profit-taking.

Analysts see three scenarios:

‱ Base case: Gradual disinflation → rates around 3% → Bitcoin strengthens.

‱ Sticky inflation: Higher-for-longer rates (~3.5%) → firmer dollar, slower BTC growth.

‱ Growth scare: Rapid cuts to 2.5% → weaker dollar → Bitcoin surge.

Overall, with Fed policy expected to ease and inflation moderating, macro conditions appear favorable for Bitcoin’s next major rally.

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