The September Setup: A Memo From the Trading Desk

From: Chief Market Strategist
To: Portfolio Management Team
Re: Market positioning ahead of the Fed's September decision
Date: September 1, 2025

Listen up. We've got thirty-six hours until Powell takes the podium, and the market is doing that thing it does when everyone thinks they're clever. CME's FedWatch is pricing an 84% chance of a quarter-point cut, which means roughly 16% of the smart money is either delusional or positioning for chaos. I prefer to assume the latter.

Here's what happened while you were pretending to read research reports: Bitcoin got absolutely humiliated by Ethereum this summer, down 7% in August while ETH posted a 17% gain. The digital gold narrative is looking more like digital lead. But here's the kicker – BTC is still trading at $108,655, which means someone is still buying this fever dream at six figures.

The cryptocurrency markets are telegraphing something the equity jockeys are missing. Over the past two months, Bitcoin is up less than 1% while ETH climbed 74%. When the supposedly "stable" crypto starts acting like a penny stock, and the "experimental" one starts looking like a blue chip, you know the risk framework everyone's using is broken.

But forget the digital casino for a moment. The real story is unfolding in the rates complex, where markets are pricing just under 2.5 rate cuts across the year's remaining three Fed meetings. That's aggressive. Aggressively stupid, perhaps, but aggressive nonetheless.

September has always been the market's cruel mistress. Historically, September and October bring increased market fluctuations and softer returns, but this year feels different. The seasonality patterns that worked when your grandfather was trading are about as useful as a chocolate teapot in an environment where a single whale can dump 24,000 BTC worth over $2.7 billion and crash Bitcoin below $110,000.

Here's my read: Powell will cut 25 basis points because he has to, not because he wants to. The market will initially rally because it's programmed to do that dance. Then reality will set in around October, when everyone realizes that cutting rates into an economy where Ethereum is hitting new all-time highs above $4,900 might have been premature.

The positioning opportunities are clear if you're paying attention:

Short-term: Ride the Fed rally, but keep your finger on the exit button. The risk-reward on being long heading into September 18th is skewed positive, but only until Powell opens his mouth.

Medium-term: Start building positions in sectors that benefit from a steeper yield curve. The market is pricing perfection on the soft-landing narrative. When that breaks – and it will break – you want to be positioned for the chaos, not caught in it.

Crypto angle: Bitcoin dominance could return in September as crypto traders await the Fed decision. I'm skeptical. ETH has momentum, institutional flows, and the narrative. Bitcoin has... what, exactly? Digital scarcity? Please.

The big picture here isn't about whether the Fed cuts 25 or 50 basis points. The big picture is that we're operating in a monetary environment where central bankers are making decisions based on market reactions rather than economic fundamentals. When the tail wags the dog this aggressively, the smart money positions for volatility, not direction.

One final thought: Some analysts are throwing around Bitcoin targets of $190,000 based on models that "layer on multipliers for fundamentals and macro conditions." These are the same people who probably thought tulips were undervalued in 1637. Trade accordingly.

Action items:

1. Review exposure limits on crypto positions
2. Increase cash allocation by 15% ahead of September 18th
3. Start building positions in volatility instruments
4. Ignore any research note that uses the phrase "this time is different"

The September setup is simple: everyone thinks they know what's coming. They don't. Position for the unexpected, because in markets like these, the unexpected is the only thing that's guaranteed.

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Views expressed are those of the author and do not constitute investment advice. Past performance does not guarantee future results. Your capital is at risk.