Bitcoin traded at $86,757 on Friday, up 3% over the past 24 hours and 2% on the week, according to CoinGecko data — a strong start to October after a September that broke the month's long-standing losing reputation. The largest cryptocurrency remains about 31% below the record it set a year ago.

The move followed Wednesday's inflation reading. August core PCE — the Federal Reserve's preferred inflation gauge, which strips out food and energy prices — came in at 3.0%, below expectations of 3.3%, and the repricing that followed has swung the odds sharply toward the Federal Reserve holding rates steady at its October 28 meeting. Fed funds futures now put the probability of a hold at 74%, according to CME's FedWatch tool, up from 35.8% a week ago, and traders on Myriad, a prediction market owned by Decrypt's parent company Dastan, price it at 75%. That marks a dramatic shift from an even split as recently as September 29, Nexo analyst Iliya Kalchev told Decrypt.

Fed officials had already set the stage. New York Fed President John Williams said on Tuesday there was "no need for urgency" after September's hike, while keeping one more increase in his baseline for later in the year. Vice Chair Philip Jefferson said on Thursday that policymakers needed more time and that adjustments should follow the data and the balance of risks.

High Treasury yields had been capping Bitcoin, and short covering — buying by traders closing out bearish bets — added to the buying once price broke its range, said Tim Sun of HashKey.

Fresh labor market data had initially pointed the same way. Jobless claims fell to 197,000 in the week to September 26, and continuing claims dropped to 1.7 million, their lowest since March 2023, while ADP private payrolls rose 90,000, comfortably ahead of forecasts.

Friday's official report was far weaker, however. Nonfarm payrolls rose just 29,000 in September against forecasts of about 90,000, the Bureau of Labor Statistics said, and unemployment edged up to 4.2%. July and August were revised down by a combined 60,000, leaving July at a loss of 10,000 jobs, and average monthly gains over the past year now stand at 45,000. The analysts quoted here commented before the release; a print that soft strengthens the case for a hold while raising the question the Fed has been trying to avoid: whether the labor market is turning. September's CPI lands on October 14.

"Cooling inflation without labor weakness is generally supportive of risk assets, Bitcoin included," Kalchev said.

ETF Flows Rebound

Spot Bitcoin ETFs took in $2.65 billion in September — behind only August's $3.52 billion since 2025 — and $6.34 billion across the third quarter, according to SoSoValue. Net assets stand at $109.3 billion. Kalchev counts inflows on 10 of the last 11 sessions, totaling roughly $3 billion.

That quarter mostly undid earlier damage. The funds lost $4.97 billion in the second quarter and $490 million in the first, leaving 2026 net inflows under $1 billion.

The intake came against a 25-basis-point rate hike and a 10-year Treasury yield above 5%, which Sun said showed investors were "not merely chasing liquidity, but are rather allocation-driven inflows." Morgan Stanley's ETF took in more than $200 million last month, a sign that "major investment banks' wealth management systems are starting to incorporate Bitcoin into client asset allocation plans," he told Decrypt.

The analysts disagree on positioning. Kalchev has futures open interest down about 12% from its September 22 peak and in the bottom decile of its one-year range, meaning the advance is not leaning on leverage. Sun, by contrast, says open interest rose as price climbed. Options show "a market hedged against a drawdown but positioned for continuation," Kalchev said, with protection at $80,000 and below and calls at $89,000 to $92,000.

Into Uptober

October and November have historically been Bitcoin's best months — a pattern traders call Uptober — averaging an 18% October gain and 46% across the quarter over the past decade, said Stephen Wundke of Algoz, who told Decrypt that "traders feel there is more upside currently than there is downside."

He added: "There is a welter of money sitting on the sidelines waiting for more positive figures. If we get those softer figures and no rate rise, BTC will move very quickly and drag the rest of the quality assets with it."

Risks remain in view. The 10-year Treasury yield is at its highest since 2002 and the Fed still projects another hike this year, so a strong payrolls print or a hot CPI would put December back in play. Wundke puts the chance of an October hike at 40%, well above the 26% futures now imply.

Owen Yang, chief executive of payments platform UPay, was more cautious. ETF flows and the SEC's work on custody keep the institutional case moving, he told Decrypt, but "institutions entering at these price levels could mean less upside momentum."

"Whether Uptober lives up to its name will depend on the macroeconomic environment and the Fed," Kalchev said, "and Bitcoin is actively pricing those outcomes."