10 October 2025

Bitcoin entered uncharted territory earlier this week to set a fresh all-time high of $126,198. The move feels like a textbook post-halving surge. But this time, the tone is more measured than manic. Around 95% of supply is back in profit and yet we are not seeing the speculative excess or memecoin frenzy that usually accompanies major peaks. The key question now: does this breakout mark the start of a durable uptrend, or will the market pause to digest gains before another push higher?

This cycle’s backdrop is fundamentally different. Spot Bitcoin ETFs are absorbing supply at record pace, pulling in tens of billions in institutional inflows. Derivatives markets are buzzing too with open interest at new highs, and funding rates have crossed 8%. This signals leverage-heavy optimism. On-chain data shows long-term holders taking profits gradually and not capitulating. Meanwhile, macro winds are turning supportive: the U.S. dollar index has fallen below 100, rate cuts are back in play, and April’s halving has tightened miner supply.

This week’s Hot Take looks at where crypto bellwether Bitcoin is headed and what investors should do.

Top-3 stories of the week:

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The newsletter is put together by Giottus Crypto Platform. You can read all the previous issues of Cryptogram here.

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WEEKLY MACROS

• Total crypto market cap - $4.13 trillion - DOWN 0.3%    

• Bitcoin price - $121,280 - DOWN 2.8%

• The dollar index (DXY) - 99.32 - UP 1.6%

• Bitcoin Dominance - 59.3% -  Unchanged

• Crypto Fear and Greed Index - 64 - Market is in Greed

THE HOT TAKE

Mapping Bitcoin’s Path Beyond $120K

Is this time different? Below we map out the drivers that will likely decide Bitcoin’s path in the next 1–3 months, balancing bullish tailwinds against bear-case risks.

ETF Gravity: The New Demand Engine

Spot Bitcoin ETFs have become the defining force of this cycle, creating a powerful gravitational pull on price. In just 21 months, BlackRock’s IBIT has amassed nearly $99 billion in assets, while total U.S. Bitcoin funds now hold roughly 7% of supply. These record flows have soaked up spot supply, driven volumes to multi-month highs, and offset profit-taking from long-term holders. With exchange reserves at multi-year lows, fewer coins remain available to sell, tightening the market’s free float.

If ETF inflows continue at a strong pace, say $500 million+ per week; they form a lasting tailwind that could sustain the uptrend. In early October, ETFs were absorbing 2,200 BTC per day. This vastly exceeds the 450 BTC mined daily. But the reflexivity cuts both ways: a shift to net outflows would remove a critical bid and likely trigger a volatility spike. For now, steady inflows suggest a new support floor is forming, but any ETF outflow shock remains the top risk to watch.

Leverage Thermals: Funding, Basis, and the Squeeze Map

Leverage has surged alongside Bitcoin’s rally, acting as both fuel and fault line. As prices cleared $120K, futures open interest hit record highs, signaling a flood of new longs. Perpetual funding rates jumped past 8% annualized, showing traders are paying steep yields to stay long. On CME, the quarterly basis remains in single digits, indicating optimism but not yet mania. Options markets echo that sentiment with implied volatility ticking up, and the 25Δ skew flipped from bearish to neutral as traders pivoted from downside protection to call buying. One-week at-the-money vols rising from 32% to 36% confirm strong demand for near-term upside exposure, painting a market leaning bullish and stretched.

Elevated leverage is a double-edged sword. It magnifies upside if momentum persists, but also heightens fragility. Historically, when funding surges sharply, Bitcoin tends to reset through short-term pullbacks or liquidation cascades. That pattern already appeared post-ATH, with a 4–5% dip flushing out overleveraged longs. A funding rate above 10% annualized for several days or open interest nearing 10% of market cap (~$220B vs. $2.3T) would signal overheating. Options skew turning neutral and call premiums rising suggest limited room for further bullish buildup. In essence, leverage can accelerate the next move up if shorts capitulate above $126K, or down if longs are forced out below $120K.

Hands Changing: LTH Distribution Without Capitulation

On-chain data points to growing profit-taking, but without panic. As Bitcoin’s rally pushed above $117K, nearly 95% of supply moved into profit, a classic late-cycle signal. Yet, long-term holders (LTHs) have been selling gradually, not capitulating. Glassnode’s Sell-Side Risk Ratio has risen from cycle lows but remains well below prior peaks. This shows that profits are being realized in moderation. Whales have eased their selling, while mid-tier holders (10–1,000 BTC) continue accumulating, creating a healthier ownership spread. Metrics like MVRV Z-Score (≈ 2.4) and adjusted SOPR (≈ 1.0) confirm coins are being sold at gains, but far from overheated levels — a hallmark of an orderly rotation rather than a top.

The balance between LTH distribution and new demand now defines the market’s texture. As long as ETFs and retail absorb these coins, the rally can sustain. Key markers to watch: if SOPR rises above 1.02 while ETF flows weaken, it may hint at fading demand and a potential local top. On the flip side, steady LTH holdings and muted young-coin spending signal conviction. The next defense zone sits around $114K–117K, where ~190,000 BTC recently changed hands which acts as the new cost basis for short-term holders. Holding this level keeps sentiment constructive; losing it risks pushing recent buyers underwater and triggering a sharper flush.

Depth Matters: When Thin Books Exaggerate Moves

Bitcoin’s liquidity has improved since the bear market but still feels thin relative to the scale of capital chasing it. Aggregate 2% order book depth recently climbed above $500M, back to pre-FTX levels, and U.S. venues now account for nearly half of global BTC liquidity (up from ~14% last year). ETF-driven institutional flow has deepened books but also pulled supply off exchanges with balances sitting near six-year lows (~2.2M BTC). That leaves fewer coins available to absorb shocks, making even modest orders move price fast. During the recent run, $3K intraday swings exposed order-book gaps as market makers widened spreads. Depth is healthier than 2022, but still shallow enough for volatility to amplify.

Liquidity will dictate how sharp the next breakout or correction feels. With much BTC in ETFs and treasuries, even small sell waves can overshoot. Bid depth within 1–2% of price remains roughly half of 2021’s, keeping buffers thin. If market makers pull back or rules tighten, expect faster whipsaws; more stablecoin inflows or ETF-spot arbitrage could steady things. 

Macro Crosswinds: Dollar, Real Yields, and Risk Appetite

Macro conditions have turned far more supportive for Bitcoin than a year ago, even as global crosscurrents keep the outlook uncertain. The U.S. Dollar Index (DXY) has eased into the 98–100 range, a material retreat from its 2022 highs, helping lift risk assets like Bitcoin and gold. Meanwhile, real yields hover near 1.8%, high by historical standards but off their peaks, as markets increasingly price in Fed rate cuts through 2025. Softer policy expectations, falling reverse repo balances, and stable Treasury liquidity have all helped revive risk appetite, reflected in October’s tandem rally across Nasdaq and crypto. 

The next phase hinges on whether these tailwinds hold. A rebound in DXY above 102 or real yields rising past 2.5% could re-tighten financial conditions and stall Bitcoin’s advance, while a dollar slide toward the mid-90s or real yields below 1% would likely reignite inflows to non-yielding stores of value. Liquidity trends remain pivotal as any pause in quantitative tightening or policy easing abroad could amplify Bitcoin’s upside. Equity sentiment will also colour direction: sharp drawdowns on recession fears could drag BTC temporarily, though dovish pivots that follow often reverse that damage. In short, the macro base case of a softer dollar and gentle rate cuts supports Bitcoin’s bullish setup into year-end.

Final Takeaways

• Base Case (70%) – Bitcoin holds above $115–$120K, consolidates, and gradually trends higher around $130K into year-end. ETF inflows stay strong, funding remains moderate, and macro conditions (weak dollar, softening yields) support risk assets.

• Bull Case (15%) – Momentum accelerates past $130K, with ETF demand or new corporate buyers triggering a sharp surge. Metrics like MVRV, funding, and SOPR would spike, hinting at short-term overextension before a cool-off.

• Bear Case (15%) – A mix of ETF outflows, stronger dollar or yields, or a macro risk-off shock drags BTC below $115K, potentially testing $108–110K support. Panic liquidations would flush leverage but likely invite dip-buyers back in.

Overall, we lean bullish given record ETF demand, improving liquidity, and steady on-chain behavior. Our base case remains trend continuation with shakeouts, while vigilance is key; if ETF flows flip negative, funding exceeds 10%, or macro data tightens, risks rise quickly. For active traders, the trend holds above $120K, but disciplined stops near $115K and light hedges keep portfolios resilient.

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Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.