Bitcoin returns above $110,500 on rate cut hopes; US-China risk still major: analysts

Bitcoin rose back above $110,000 early Monday, rebounding alongside broader crypto market gains as traders regained confidence in macroeconomic conditions.

According to The Block's crypto price page, bitcoin climbed 3.16% in the past 24 hours to trade at $110,544, after spending the previous four days below the $110,000 mark.

Ether jumped 3.6% to trade at $4,036, reclaiming the $4,000 threshold. BNB gained 3.91%, XRP advanced 3.54% and Solana added 2.68%, signaling renewed optimism across the broader crypto market.

"The recent rebound in Bitcoin, now trading above $110,000, has been driven by a combination of institutional inflows and improving macroeconomic conditions," said Rachael Lucas, crypto analyst at BTC Markets. Lucas pointed out that spot crypto ETFs have seen renewed demand, with participants treating the recent sell-off as a buying opportunity. 

The crypto market had recently faltered from major macroeconomic headlines including U.S. President Donald Trump's China tariffs announcement and mounting concerns regarding U.S. regional banks' involvement with bad loans.

Despite the macro headwinds, traders are now factoring in a potential interest rate cut in October and an early end to quantitative tightening, the analyst said. 

"Chair Jerome Powell acknowledged that while growth remains firmer than expected, labor market softness persists," Lucas said. "This shift has eased bond yields and improved the liquidity environment for risk assets, including digital assets."

The CME Group's FedWatch Tool currently indicates a 98.9% chance that the U.S. would lower rates by 25 basis points at the next meeting.

"Upcoming U.S. inflation and manufacturing figures, along with Australian employment and retail data, could influence interest rate expectations and broader risk sentiment," Lucas said. "These factors will likely determine whether Bitcoin continues to consolidate or begins a new directional move."

Key levels

Kronos Research CIO Vincent Liu said the key levels to watch at current prices are $107,000 and $110,000.

"A break below structural support around $107K may trigger liquidations and a sharp sentiment shift, especially if macro or geopolitical shocks resurface," Liu said. "Sustained buying pressure above $111K could extend momentum and open the door for another leg higher."

Lucas also noted that bitcoin is testing resistance between $111,700 and $115,500, where a decisive break above $111,000 could result in a short squeeze, potentially accelerating upward momentum.

Nonetheless, significant near-term risks remain, according to BTC Markets' Lucas. Geopolitical tensions between the U.S. and China continue to weigh on investor sentiment, especially with the upcoming Trump-Xi meeting at the end of the month, which Lucas said carries "significant headline risk."