Key Takeaways
Are October rate cuts likely?
A confirmed cut still feels far-fetched as markets are waiting on September CPI for clarity.
How is Bitcoin reacting ahead of the CPI?
Bitcoin and the broader crypto market remain capped, with $126k ATH likely a local top until macro signals stabilize.
Are the odds of an October rate cut slipping away?
Despite the shutdown, the Bureau of Labor Statistics (BLS) has recalled its staff to ensure the September CPI report is released on schedule. It could arrive anytime in the next 20 days ahead of the FOMC meeting.
No doubt, traders are glued to inflation prints. At press time, Truflation’s real-time index had a value of 2.23% – A touch softer than BLS’s 2.9% for August. In plain market speak, that’s easing price pressure on everyday goods and services.
Source: Truflation
However, that alone doesn’t scream bullish.
Flashback to the September cut, the Fed trimmed 25bps amid a weakening U.S Dollar, with the U.S. dollar index (DXY) sliding to a two-month low of 96 and the 10-year Treasury yield dropping to a five-month low of 3.90%.
And yet, Bitcoin [BTC] crashed 3.5%. Why? The market reassessed inflation risks after the CPI rose by 0.2%, pushing demand towards safe-haven assets while reversing the initial risk-on boost.
Is Bitcoin bracing for a September CPI shock?
In this context, BLS calling back its staff for the September CPI is a key pivot.
The market reaction says it all. DXY is creeping back towards 100 for the first time since late July. All while the 10-year Treasury dropped by 1.5% in under a week as capital kept rotating into bonds.
Meanwhile, crypto is taking a hit too. In fact, the TOTAL market cap is down 1.45% over the week. Roughly $250 billion off the $4.27 trillion top have been wiped out – A sign that capital is clearly flowing out of risk-on plays.
Source: TradingView (TOTAL)
In short, a confirmed October rate cut still feels out of reach.
On the bullish side, the September CPI could finally give the market the clarity it’s been missing after the shutdown stalled key macro prints. It would lend more legitimacy to Bitcoin’s $126k ATH beyond just a “hype” move.
That being said, until the BLS releases the CPI, the playbook will remain uncertain. Rate cut or no rate cut, risk flows into BTC and the broader crypto space will remain capped, making Bitcoin’s $126k ATH a likely local top for now.
