Inflation to set up Bitcoin melt-up as rates to fall to 2.75% by next October
John: Hey everyone, I’m John, a veteran writer for Blockchain Bulletin, where I break down the latest in Web3, virtual currencies, and blockchain in straightforward, encouraging terms. Today, we’re diving into how US inflation trends and potential Federal Reserve rate cuts could spark a big rally—or “melt-up”—in Bitcoin’s price, based on recent data and expert insights. For readers who want a full step-by-step guide, you can also check this exchange guide.
Lila: Hi, I’m Lila, John’s curious assistant always eager to learn more about crypto. John, for beginners like me, what exactly is a “melt-up” in Bitcoin, and how do inflation and rate cuts play into it?
Basics of Inflation and Fed Rates
John: Great question, Lila. Inflation measures how much prices for goods and services rise over time—in the US, it’s tracked by the Consumer Price Index (CPI). When inflation is high, the Federal Reserve often raises interest rates to cool things down, making borrowing more expensive and slowing spending.
Lila: Okay, that makes sense. So, if rates are cut, does that mean cheaper money for everyone?
John: Exactly! Lower rates encourage borrowing and investing, which can boost riskier assets like stocks and cryptocurrencies. Think of it like turning down the heat on a stove—the economy simmers nicely without boiling over. (And hey, if only my coffee prices cooled as fast as these rates!)
Recent Inflation Data as of 2025-10
John: As of now, on 2025-10-26, the latest US CPI for September 2025 came in at 3.0% year-over-year, with a monthly increase of 0.3%. Core CPI, which excludes volatile food and energy prices, held steady at 3.0% annually and 0.2% monthly. This data, released amid expectations of Fed actions, shows inflation ticking up slightly but still manageable.
Lila: What’s “core CPI”? Sounds like something from a gym workout.
John: Haha, good one—it’s basically CPI without the ups and downs of gas and groceries, giving a clearer picture of underlying trends. Sources like CryptoSlate and CoinDesk reported that gasoline prices rose 4.1% in September 2025, contributing to the headline figure, but overall, this sets the stage for potential rate cuts.
How Inflation Impacts Bitcoin
John: Bitcoin often reacts to these macro events because it’s seen as a hedge against inflation—like digital gold. When inflation rises and rates are expected to fall, investors flock to Bitcoin, driving up its price. For instance, following the softer-than-expected September 2025 CPI, Bitcoin surged to around $111,500, a 2.5% daily jump, as noted by Bitget News on 2025-10-25.
Lila: A hedge? Like a garden bush?
John: Not quite—it’s an asset that protects your wealth from losing value due to inflation. In the past, during high inflation periods like 2021-2022, Bitcoin hit all-time highs above $60,000 before corrections. Now, with rates potentially dropping to 2.75% by October 2026, analysts from CoinLedger predict this could fuel higher crypto prices in general.
Historical Context of Rate Cuts and Crypto
John: Looking back, the Fed’s rate cut on 2025-09-17—the first since December 2023—didn’t immediately spark a rally, with Bitcoin stalling around $110,000, per The Block’s report on 2025-09-08. But historically, post-cut environments have been bullish; after cuts in 2019, Bitcoin climbed significantly by 2020. Forbes noted on 2025-09-17 that markets failed to surge right away, but long-term trends point to upside.
Lila: So, it’s not always instant? That helps manage expectations.
John: Right, patience is key in crypto. CoinDesk’s analysis from 2025-09-13 suggests that while short-term volatility might occur, over 12 months, assets like Bitcoin and gold could see major gains from sustained lower rates. (If only my retirement fund moved as fast as these predictions!)
Current Market Predictions for 2025
John: As we head into late 2025, experts are optimistic. Crypto.com’s update on 2025-09-17 predicts Fed rate cuts could shape crypto positively, with Bitcoin potentially rallying if rates fall further. Bankrate’s piece on 2025-09-22 highlights that a declining rate environment boosts stocks and crypto, and recent news from BitcoinEthereumNews on 2025-10-24 notes a delayed inflation report could sway Bitcoin amid cut expectations.
Lila: Any specific numbers or timelines?
John: Absolutely—TradingView’s prediction on 2025-10-21 suggests Bitcoin could reach new highs in 2025’s second half, building on its recent ATH above $112,000. Global inflation is declining to 5.43% in 2025, per AInvest’s stats, with the Fed possibly holding rates after three cuts, fostering a bullish setup.
Risks and Considerations
John: While exciting, there are risks. Institutional profit-taking and flat ETF flows can cap momentum, as seen in The Block’s 2025-09-08 report. Plus, if inflation surprises to the upside, rate cuts might pause, pressuring prices. Always remember, crypto is volatile—Bitcoin dropped sharply in 2022 amid rate hikes.
Lila: How can readers stay safe?
John: Good point. Here are some safeguards:
- Diversify your portfolio—don’t put all eggs in one crypto basket.
- Use trusted exchanges with strong security, like those with regulatory compliance.
- Stay informed via official sources like CoinDesk or regulatory news from the SEC.
- Consider dollar-cost averaging to mitigate volatility risks.
Looking Ahead to 2026 and Beyond
John: Moving forward, if rates fall to 2.75% by October 2026 as futures suggest, per CryptoSlate’s original article, this could trigger a Bitcoin melt-up. AInvest’s 2025-10-22 report ties this to ETF inflows and Fed’s dovish stance, potentially strengthening Bitcoin’s tie to equities. Economic Times on 2025-10-21 notes traders eyeing CPI for volatility, but the long-term outlook is positive.
Lila: Melt-up sounds intense—what might that look like?
John: It could mean rapid price increases, like Bitcoin pushing past $150,000 if trends hold, based on Forbes’ 2025-09-16 analysis of rate cut reactions. But remember, these are based on current data—no guarantees in crypto.
John: Wrapping up, it’s fascinating how macroeconomic factors like inflation and Fed rates can supercharge Bitcoin’s potential, setting up what could be an exciting period ahead. Stay curious, do your research, and approach with caution. And if you’d like even more exchange tips, have a look at this global guide.
Lila: Thanks, John—that clears up a lot! Key takeaway: Keep an eye on those rate cuts; they might just light a fire under Bitcoin.
This article was created using the original article below and verified real-time sources:
- Inflation to set up Bitcoin melt-up as rates to fall to 2.75% by next October
- Bitcoin and Altcoins Surge Amidst US CPI Drop and Rising Odds of Federal Rate Cut | Bitget News
- What the Fed’s Sept. 17 Interest Rate Decision Means for Crypto, Gold and Stocks
- Crypto Markets Fail To Surge Following Fed Rate Cut Announcement