Crypto Market Hits $4T Amid Fed Cut Hopes & ETF Inflows

The cryptocurrency market recently surpassed a significant $4 trillion valuation, fueled by increasing expectations of interest rate reductions from the U.S. Federal Reserve and a notable resurgence in institutional capital inflows. This convergence of macroeconomic optimism and strategic investor repositioning signals a pivotal phase for digital assets, driving a 1.61% increase over the past 24 hours and a 5.9% weekly gain, notably correlating with the Nasdaq-100 at +0.88.

Monetary Policy Shifts and Market Appetites

Market participants are now pricing in a near-certainty of interest rate cuts by the Federal Reserve on September 17, with some analysts, tracked by CME FedWatch data, even anticipating a 0.5% reduction. This anticipated monetary policy shift typically diminishes the attractiveness of traditional fixed-income assets like government bonds, thereby increasing the appeal of higher-risk investments such as cryptocurrencies. Historically, Bitcoin experienced a 160% surge during a similar easing cycle in 2024. Furthermore, the 24-hour correlation between gold and cryptocurrencies has risen to +0.76, suggesting that digital assets are increasingly perceived as a potential safe haven. Investors are closely monitoring the Fed’s decision and the release of Consumer Price Index (CPI) data on September 12.

Institutional Capital Inflows and ETF Dynamics

A powerful catalyst for the current market surge is the renewed institutional interest. U.S. spot Bitcoin Exchange-Traded Funds (ETFs) recently recorded a substantial $300 million in inflows within a 24-hour period, effectively reversing the outflows seen in August. Complementing this, MicroStrategy acquired 1,955 BTC, worth $217 million. Concurrently, applications for Ethereum (ETH) ETFs have increased by 15% over the past month, indicating a broadening institutional appetite beyond Bitcoin. The Ethereum staking queue has also expanded to 860,000 ETH, valued at an estimated $3.7 billion, which constrains the circulating supply. Investors are closely monitoring the Securities and Exchange Commission’s (SEC) decision regarding general crypto ETF rules, anticipated in September 2025, which could expedite approvals for a wider range of altcoin ETFs.

Altcoin Rotation and Market Overheating Signals

Capital rotation is evident within the broader crypto ecosystem, as Bitcoin’s dominance has slightly receded to 57.16%, a 0.42% daily decrease. This reallocation sees capital shifting towards prominent altcoins such as Solana (+4.2%) and XRP (+2.1%), alongside renewed interest in meme coins. The Altcoin Season Index has climbed to 66, nearing the traditional threshold of 75 that signals a full “altcoin season.” While this indicates traders seeking higher risk-reward opportunities, the 7-day Relative Strength Index (RSI-7) for TOTAL3, which represents the total altcoin market capitalization, stands at 91. This metric suggests an overbought condition, warranting caution. A potential test of Bitcoin’s dominance at the 56% level could serve as a critical indicator, with a breakthrough potentially accelerating altcoin rallies.

Conclusion

The current cryptocurrency market rally is underpinned by a confluence of macroeconomic optimism and strategic institutional repositioning in anticipation of the Federal Reserve’s policy decisions. While robust ETF inflows and sustained altcoin momentum point towards continued growth potential, critical indicators such as Bitcoin’s RSI-7 at 91 and a substantial $1.39 trillion in open interest across derivatives markets suggest the need for circumspection. The market’s trajectory hinges significantly on whether the Fed meets current expectations on September 17, or if profit-taking ensues. Monitoring Bitcoin’s support level at $110,000 and the sustained health of ETF flows will be crucial for navigating the market in the coming weeks.