The Fed's rate cut boosts US stock futures, while market focus shifts to the Bank of Japan and the call between the Chinese and American leaders; Bitcoin strengthens simultaneously and may reach new highs.

With the support of the Fed's interest rate cuts, U.S. stock index futures rose moderately in early trading. Market focus is shifting towards the Bank of Japan (BoJ) policy decision, which could trigger significant fluctuations in the yen and impact the U.S. stock market. Meanwhile, President Trump’s phone talks with Chinese leaders have also brought uncertainty to the market. Amidst the intertwining of these macroeconomic and geopolitical factors, Bitcoin prices are performing strongly. Analysts point out that the historical correlation between BTC and the U.S. stock market indicates that it is likely to set new historical highs in the coming weeks.

US stock futures rose moderately, and the market is wary of the risk of unwinding yen arbitrage trades.

Under the favorable news that the Fed announced a 25 basis point rate cut and that there may be subsequent adjustments in the fourth quarter, the market's initial optimism has faded somewhat during early trading, with U.S. stock index futures only recording a slight rise. The immediate focus of the market has shifted to the Bank of Japan's monetary policy decision. According to the latest Bloomberg survey of Bank of Japan observers, 88% of economists expect the Bank of Japan to maintain its current monetary policy. However, there is still uncertainty in the market regarding the Bank of Japan's interest rate path in the fourth quarter.

Why Stock Futures Traders Should Worry About Yen Arbitrage Trades and the Bank of Japan?

A "hawkish hold" resolution—where policymakers support future rate hikes—could narrow the US-Japan interest rate differential, benefiting the yen and potentially leading to a significant drop in the USD/JPY exchange rate. Major fluctuations in the USD/JPY could trigger margin calls, forcing investors to close their arbitrage trades, including their holdings of highly leveraged US stocks. In July 2024, traders faced a similar scenario when the Fed hinted at multiple rate cuts while the Bank of Japan shifted towards policy normalization. Affected by the closure of arbitrage trades, the USD/JPY exchange rate plummeted from 152.748 on July 31 to 139.576 on September 16, and the Nasdaq Composite Index stabilized only after a 11% drop over three trading days.

In addition to the risks from the Bank of Japan, the potential risk of a government shutdown in the United States is another obstacle for the market, as Democrats have expressed opposition to a temporary spending bill.

Market Reaction: US stock futures rose slightly boosted by the Fed's policy outlook.

Despite facing multiple potential market resistances, U.S. stock index futures regained upward momentum in morning trading. The Dow Jones E-mini rose by 29 points, the Nasdaq 100 E-mini increased by 5 points, while the S&P 500 E-mini climbed by 4 points. The market's bets on the Fed continuing to cut rates in October and December suggest a long-term bullish outlook. Historically, whenever the Fed cuts rates and U.S. stock indices are near or at historical highs, the stock market typically experiences a rising trend.

Fed Effect

Despite the ongoing trade disputes, global stock markets have reached unprecedented levels, highlighting the importance of the Fed's policy stance on risk assets.

The Kobeissi Letter commented on recent stock market trends, stating: "The global stock market capitalization has reached a record 143.8 trillion USD. Since the low in April 2025, the global stock value has surged by 33.8 trillion USD, an increase of 31%. Moreover, since the low in 2020, the global market has appreciated by 83.0 trillion USD, with a rise of 137%. At the current growth rate, the incremental global stock market capitalization will exceed 100 trillion USD by the end of 2025, marking the first time in history that the global stock market capitalization will surpass 150 trillion USD."

Geopolitical driving factors: The China-U.S. call is receiving much attention

Later on Friday, traders were preparing for a phone call between President Trump and Chinese leaders. In recent weeks, US-China relations have become increasingly tense, with China banning NVIDIA chips and the US cracking down on Chinese goods transshipped through third countries. Beijing has also taken action against Trump's agricultural voting base.

CN Wire reported: "At the start of this export season, China did not purchase any American soybeans for the first time since records began in 1999, indicating that China is using agriculture as leverage in its trade war with Washington. Last year, the U.S. provided one-fifth of China's soybean imports, worth over $12 billion. However, with ample stockpiles, China is showing patience and is prepared to talk with Trump on issues such as semiconductors and rare earths on Friday."

If an agreement is reached, China may unlock rare earth supplies and make large soybean purchases in exchange for lower tariffs, which would be a "risk-on" event. However, the potential negative scenario also keeps traders cautious. President Trump may threaten to end the tariff truce and impose a 145% tariff on Chinese goods, which would be a "risk-off" event.

Bitcoin Market Outlook: U.S. Stocks Boost Coin Prices Rise

In this complex market context, Bitcoin, as a major risk asset, has also attracted much attention regarding its price trend. After the Fed recently decided to cut interest rates, the price of Bitcoin resumed its upward trajectory after briefly consolidating below $115,000.

This shift aligns with the predictions of leading analysts, who believe that this top cryptocurrency is likely to reach new all-time highs (ATH) in the coming months. Some experts even think that this milestone could be achieved within two weeks.

Bullish Indicators Emerge

Market expert Axel Adler emphasized the key indicators supporting this outlook. He pointed out on the social media platform X that BTC futures are trading at a premium to spot prices, and the basis remains positive. Furthermore, the 7-day basis is above the 30-day average, indicating that the market is in a bullish state.

Adler's analysis indicates that the likelihood of Bitcoin prices continuing to gradually rise or consolidate sideways over the next two weeks is about 70%. He emphasized that if a series of bullish signals emerge—such as price increases, widening basis, and growth in open interest—this could attract new long positions and increase the chances of Bitcoin prices reaching new highs.

It is worth noting that the 155-day and 365-day market value to realized value (MVRV) Z-scores for short-term holders (STH) are hovering around zero, indicating that the market is in a balanced state, neither overheated nor oversold. Given that the Bitcoin price is slightly above its short-term realized price, Adler emphasizes that the stage has been set for a potential consolidation in the next one to two weeks, which may be followed by a surge towards new highs. Adler refers to this anticipated trend as a new "October Bull Run" (Uptober) for Bitcoin and the broader digital asset market.

The strong performance of the US stock market suggests a rise in Bitcoin prices

Another factor driving the bullish sentiment for Bitcoin is the recent performance of the US stock market, which has shown a significant upward trend over the past two weeks. Analysts from The Bull Theory have noted a correlation between the rise in the stock market and Bitcoin's price movements, believing that when the US stock market hits new highs, Bitcoin tends to rise.

Historical data supports this view: As shown in the figure below, after the S&P 500 index set a historic high, the price of Bitcoin averaged a rise of 12% within 30 days and 36% within 90 days. If this happens again, the price of Bitcoin will reach $131,000 and $178,000, respectively. Similarly, after the Nasdaq index set a historic high, the average rise of Bitcoin was 16% within 30 days and 46% within 90 days. If a similar price trend occurs again from the current trading level of $117,770, the leading cryptocurrency in the market will reach $136,000 and $199,000, respectively.

Conclusion

Currently, the global market is at a complex and volatile critical moment, shaped by the Fed's policies, the Bank of Japan's decisions, and communications between the highest leaders of China and the U.S., which collectively influence market sentiment and asset flows. In this context, Bitcoin, as a highly liquid risk asset, relies not only on its own market fundamentals but is also closely linked to global macroeconomic and geopolitical dynamics. Analysts' bullish forecasts based on historical data and key on-chain indicators suggest that Bitcoin is expected to benefit and break new milestones in this bull market led by U.S. stocks. This trend further reinforces the correlation between Bitcoin and global mainstream financial markets, indicating that the integration of cryptocurrencies with traditional financial systems is accelerating, and its position in the global financial landscape is becoming increasingly important.