Bitcoin, Seasonality, and the Coming Wave of Fed Easing
- Nick Ward
- Sep 7
- 5 min read
Bitcoin has slipped roughly 10% from its recent all-time high of $124,533. Underneath the pullback, several factors stand out: on-chain indicators remain far from levels seen at prior peaks, seasonal trends point to historically stronger months, and monetary policy is shifting toward easing. Viewed together, the drawdown looks less like exhaustion and more like the kind of pause that has often given way to further upside.
Zero of 30 Peak Indicators Have Triggered
One way analysts gauge whether Bitcoin is nearing the end of a cycle is by watching a set of “peak indicators.” These are metrics built from blockchain data and market history that tend to flare up when conditions get overheated. For example, some track how far prices have run above long-term averages, others look at how profitable existing holders are, and still others measure the age and turnover of coins moving on the network.
In every prior cycle — 2013, 2017, and 2021 — many of these measures spiked together, signaling that liquidity, leverage, and speculation had reached unsustainable levels. Those clusters often marked the final leg of the rally.
Today, none of the 30 major indicators are flashing. That doesn’t mean Bitcoin is immune to short-term corrections, but it does suggest that the structural hallmarks of a late-stage blow-off have not yet appeared. Against that backdrop, the current environment looks less like the euphoria of a peak and more like an expansion that still has room to run.
Seasonality: September Weakness, Year-End Strength
Bitcoin also exhibits a clear seasonal rhythm. Across more than a decade of data, September has consistently been the weakest month, while October and November have delivered the strongest returns of the year. On average, October gains exceed 20% and November has often produced 30%–40% rallies, while September tends to see consolidation or retracement.
This pattern has proven durable across multiple cycles, irrespective of whether Bitcoin was in a broader bull or bear market. That seasonality matters today because the current 10% pullback has occurred just as the calendar has rolled into September, the statistically weakest month. If historical norms hold, this may be less a cause for concern and more a setup for a renewed surge into year-end.
The Fed Reframes Its Policy Framework Emphasizing Unemployment
At Jackson Hole 2025, Fed Chair Jerome Powell unveiled a reset of the Fed’s monetary strategy. The central bank reaffirmed its 2% inflation goal but abandoned the “average inflation targeting” experiment of 2020 — a policy that allowed inflation to overshoot after periods of weakness, but quickly lost credibility during the post-pandemic surge in prices.
Equally important, the Fed clarified how it balances jobs and inflation. The old framework gave disproportionate weight to employment “shortfalls,” effectively promising to act quickly when labor markets weakened but less aggressively when they overheated. That asymmetry has now been removed. The new approach restores symmetry: strong job markets won’t automatically force hikes, but inflation and employment will be judged side by side when they conflict.
For markets, the change represents more than a return to discretion — it signals a subtle shift in priorities. By moving away from rigid rules, the Fed has given itself leeway to cut rates even in an environment where inflation remains elevated. Policymakers can now frame easing as a response to deteriorating labor conditions, not as a retreat from the inflation fight. That flexibility matters, because with the job market weakening, the case for rate cuts is building despite the persistence of price pressures.
A Labor Market in Decline
Labor conditions are weakening faster than policymakers anticipated. Initial jobless claims have climbed to 237,000, private payroll growth slowed to just 54,000 in August, and the unemployment rate has risen to 4.3%, its highest since 2021.
Perhaps more telling are the revisions. Since early 2022, more than 1.1 million jobs have been revised out of the data, including nearly half a million this year alone — the steepest downward adjustment since the global financial crisis. These revisions don’t just change the numbers; they erode confidence in the strength of the post-pandemic expansion and reshape the trend line from resilience to fragility.
The streak of consecutive payroll gains, once cited as evidence of durability, has ended. Surveys show households bracing for higher unemployment, while businesses, scarred by pandemic hiring struggles, are hoarding labor rather than expanding headcount. Together, these signals suggest not a soft landing but an economy losing momentum — exactly the type of deterioration the Fed’s revised framework gives it room to address.
If you take a look at NET revisions just for 2025, the US has seen -482,000 jobs revised out of the initially reported data. This is roughly equivalent to the entire population of Atlanta, GA. All revised out of just 2025's data year-to-date.
Markets Are Pricing In Three Rate Cuts
The weakening labor backdrop has quickly shifted expectations in financial markets. Futures contracts now assign a near-100% probability to a quarter-point cut at the September FOMC meeting, with whispers of a half-point move entering the conversation. By January, the policy rate is expected to be 3.25%–3.50%, more than a full percentage point below current levels. Analysts anticipate at least three cuts by year-end, with odds tilted toward further easing if unemployment climbs faster than expected.
This repricing has already filtered through asset markets: Treasury yields are lower, equities are firmer, and the dollar has softened modestly. Together, these moves suggest the era of restrictive policy may be giving way to easier conditions — an environment that has historically proven pivotal for alternative assets like Bitcoin.
Why Rate Cuts Matter to Bitcoin
With markets now anticipating a string of rate cuts, the question is why this matters for Bitcoin. The significance goes beyond lower discount rates: easing policy exposes the fragility of a debt-heavy system. U.S. federal debt exceeds 120% of GDP, and interest expense is climbing at an unsustainable pace. To manage that burden, policymakers lean on financial repression — keeping rates below inflation and letting debt erode in real terms.
Bitcoin is uniquely positioned for such an environment. With its fixed supply, it cannot be diluted by central bank policy. When real yields fall and liquidity expands, Bitcoin has repeatedly absorbed capital seeking protection from debasement — most notably during the 2020–21 easing cycle. Its global, 24/7 market reprices instantly to shifts in policy, making it, in Paul Tudor Jones’s words, the “fastest horse” in the race against monetary debasement.
In that sense, Bitcoin is more than a speculative asset. It stands as the antithesis of financial repression. Bonds, cash, and equities remain tethered to the policy cycle, while Bitcoin’s scarcity allows it to benefit directly when liquidity is forced back into the system.
The Pieces are Falling into Place
Bitcoin’s setup is increasingly shaped by macro conditions. None of the traditional cycle peak signals are flashing, and seasonal trends suggest historically stronger months may lie ahead. At the same time, the Fed appears positioned to ease as labor markets soften and debt pressures build. Together, these dynamics create an environment worth watching for an asset that tends to respond quickly when liquidity expands.
While outcomes are never assured, several of the conditions that have aligned ahead of past market rallies are beginning to reemerge.
Comments