Nexo sees Bitcoin outlook hinging on Fed rates and ETF demand in Q4
Nexo has identified Federal Reserve policy, US Treasury yields, and exchange-traded fund (ETF) flows as key factors that could determine Bitcoin’s direction in the fourth quarter, following a 42.7% gain in the third quarter.
In its first Digital Assets in Q4: Market Outlook, the digital assets wealth platform said Bitcoin’s recovery had improved the market backdrop, but further gains would depend on inflation data and the direction of interest rates.
Bitcoin rose 7.3% in July, 25% in August and 6.4% in September, ending three consecutive quarterly declines.
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Selling pressure eased through September, while the share of Bitcoin supply held at a profit climbed to approximately 69%.
However, ETF flows turned negative in October, highlighting the uncertainty surrounding demand.
Nexo’s outlook identified the Federal Reserve’s October 28 decision as a major event for digital assets, with a rate hold potentially supporting the market and an increase making the outlook more cautious.
Fed policy and Treasury yields shape Bitcoin outlook
Interest rates remain a central factor in Bitcoin’s near-term prospects.
Nexo highlighted the 30-year US Treasury yield, which stood at approximately 5.6%, as a potential headwind for the cryptocurrency.
Higher government bond yields can make safer assets more attractive relative to Bitcoin.
Inflation data has added uncertainty to the outlook.
The September consumer price index rose 3.7% year over year, while core inflation reached 2.6%, according to the report.
The figures increased market expectations of another Federal Reserve rate hike.
As of October 15, markets priced in a 68% probability of the Fed holding rates steady, based on CME FedWatch.
The probability of a hike stood at approximately 32%, after reaching nearly 54% following the inflation report.
Nexo outlined three potential paths for Bitcoin in the fourth quarter.
In the constructive scenario, cooling inflation, a Fed hold, stabilising Treasury yields and renewed ETF inflows could help Bitcoin recover above $82,000 and test the 88,000–90,000 range.
The cryptocurrency could then move towards 105,000–110,000.
Under the consolidation scenario, mixed economic data and a Fed hold that leaves December policy uncertain could keep Bitcoin trading between its 365-day average of approximately $78,000 and the 88,000–90,000 area.
A more adverse outcome would involve persistent inflation, a hawkish Fed and rising long-term yields.
In that case, renewed ETF outflows and further weekly closes below $82,000 could push Bitcoin below $80,000 and towards its 365-day average.
Bitcoin faces a key holder cost-basis zone
Bitcoin’s recovery has brought it back into a significant area of investor cost bases, according to Nexo’s analysis.
The cryptocurrency reclaimed its 365-day average in September after spending ten months below that level.
However, the report noted that the market had only recently returned to levels close to the average purchase prices of major investor groups.
US spot Bitcoin ETF holders had an average cost basis of approximately $82,300 per Bitcoin.
The cryptocurrency closed below that level on October 8, 12 and 14, making the $82,000 area an important level to watch.
Across the wider market, around 69% of Bitcoin supply was held at a profit, up from 46% at the June low.
Nexo identified a concentrated band of investor cost bases, representing 12% of supply, between $81,000 and $88,000.
This concentration could influence price movements as Bitcoin trades through the range.
The report also noted that only about 5% of supply had a cost basis between $88,000 and $95,000.
Bitcoin remained above the estimated realised price of approximately $53,900, which represents the average cost basis of all coins, according to Glassnode’s measure.
JPMorgan’s estimated Bitcoin mining production cost was around $85,000, although the cryptocurrency had recently traded back below that level after moving above it in late September.
Earnings and year-end positioning could drive volatility
Nexo also highlighted corporate earnings and year-end portfolio adjustments as potential market catalysts.
Third-quarter results from major US technology companies and Strategy, the largest corporate holder of Bitcoin, were expected in late October.
Technology earnings could influence broader investor risk appetite, while Strategy’s results could offer insight into corporate demand for Bitcoin.
December could bring additional volatility despite typically quieter trading volumes.
Portfolio rebalancing and year-end reporting may shift positions during the second half of the month, while thin liquidity between December 26 and January 1 could amplify price movements.
Overall, Nexo’s outlook suggests that Bitcoin’s fourth-quarter performance will depend on the interaction between macroeconomic conditions, ETF demand, and investor positioning.
The recovery has improved market structure, but inflation and the Federal Reserve’s policy decision remain key risks.
