Following the Fed's first rate cut in September, the market experienced a brief pullback, widely interpreted as "buy the rumor, sell the news." However, this interpretation overlooks the gradual nature of monetary policy transmission—just as the market didn't necessarily turn down immediately at the start of the hiking cycle, the stimulative effect of rate cuts on the market also takes time to materialize gradually. According to predictions from the federal funds rate futures market, the federal funds rate is expected to drop cumulatively by 130 to 155 basis points from this September to next April. Therefore, the current initial 25-basis-point cut is merely the beginning of the interest rate downward cycle.
Although the final extent of the rate cuts and the effectiveness of credit expansion remain constrained by the dual risks of inflation rebound and economic recession, the CME FedWatch Tool shows that the market still assigns a high probability of 72% for the Fed to cut rates by 75 basis points within the year, and the first two cuts are generally viewed as precautionary (two months of data samples are insufficient to confirm a recession). Therefore, the window between the second and third rate cuts might present an excellent opportunity for long positions.
In the current market environment of declining interest rates and ample liquidity, institutional financing capabilities continue to strengthen, further reinforcing their path-dependent behavior—directing newly acquired funds towards increasing holdings in existing asset types. Consequently, the valuation expansion for core assets like BTC, ETH, SOL, and BNB is set to continue. Simultaneously, as market risk appetite steadily improves, some low-cap altcoins will also experience a strong catch-up rally. However, it's noteworthy that the synchronized rise of large and small-cap cryptocurrencies will significantly consume on-market liquidity and push existing positions to higher levels. This process might accelerate the formation of the market's medium-to-long-term top.
As of now, significant divergence remains in the market regarding the sustainability of the ETH rally. A key signal is that many whales have taken the opportunity to reduce or even liquidate their positions during the recent rebound. A typical example is Yi Li Hua, who publicly called for "ETH to break $10,000 next year" while simultaneously liquidating his entire holding of 145,000 ETH.
Investor caution stems mainly from two concerns: first, the mNAV of many DAT companies is approaching 1, limiting their future financing ability; second, some DAT companies have overused leverage and might face the repercussions of a violent deleveraging. Bitmine and its CEO Tom Lee, currently in the spotlight, have become targets of this sentiment.
Andrew Kang, co-founder of Mechanism Capital, publicly criticized Tom Lee, stating he "lacks basic financial literacy, and most of his bullish logic is full of holes." Concurrently, Ethereum founder Vitalik Buterin has also expressed concerns about the financial stability of DAT companies in multiple interviews.
However, in reality, Bitmine remains one of the DAT companies with the healthiest balance sheets in the market. Its financing structure relies primarily on PIPE, ATM, and RDO, with extremely low reliance on debt financing, and it has not issued high-dividend preferred shares. Thanks to this robust capital structure, Bitmine faces neither the liquidation risks associated with MSTR nor heavy dividend distribution pressures. Furthermore, Bitmine's financing capability has not been constrained by the decline in mNAV. Public data shows that on September 19, Bitmine completed a Registered Direct Offering (RDO) of approximately $365 million at a 14% premium to the market price,附带 warrants with an exercise price of $87.50, expiring on March 22, 2029. This premium issuance indicates that institutions remain optimistic about Bitmine's future upside potential.
On October 5, 2025, the price of Bitcoin surged to $125,689, setting a new historical record again. However, unlike the frenzy and noise that accompanied previous bull markets, this peak was underpinned by a surprising calmness in the market, and Bitcoin's trajectory seems to be drifting away from the average retail investor.
In stark contrast to the market's calmness, institutional capital is flooding in on an unprecedented scale. Last week, Bitcoin spot ETFs recorded a net inflow of $3.24 billion, the second-largest weekly inflow on record. Meanwhile, on-chain data reveals tightness on the supply side: the BTC balance on exchanges has dropped to 1.8 million, the lowest since 2018; while "whale" addresses (holding 100-1,000 BTC) aggressively accumulated 72,000 BTC within seven days. These medium-sized whales now hold a record 3.78 million BTC.
This coexistence of retail calm and institutional frenzy reflects a fundamental structural shift the market is undergoing—it is transitioning from a speculation-driven market fueled by retail sentiment to an asset allocation market reshaped by institutional capital.
Recent research from J.P. Morgan's strategy team indicates that Bitcoin is currently more attractive than gold: although Bitcoin's volatility is 1.85 times that of gold, its market capitalization of approximately $2.3 trillion is far below gold's private investment scale of about $6 trillion. To match this scale, Bitcoin's market cap would need to rise by approximately 42% to $165,000 per coin, implying that the potential return for bearing its additional volatility risk is much higher than that for gold, making it significantly undervalued on a risk-adjusted basis.
