After the not so dovish speeches by the FOMC members on Monday, BTC trended downwards throughout the week from its highs around USD 64,500, reaching lows around USD 58,900 in yesterday’s session after higher-than-expected US CPI and Jobless Claims data. Overnight, it reclaimed its critical USD 60,000 level and is now trading around USD 60,700. From a lower time frame perspective, BTC needs to break above USD 60,800 from where it can go to USD 61,300 and then USD 61,800. We might retest yesterday’s lows in today’s US session; however, my short-term bias is rather up than down, and we might be able to close October with a positive handle.
Despite the recent memecoin rally, altcoins in general appear to have bottomed out, as reflected by the ETHBTC’s 2.80% WoW rise, which reclaimed USD 2,400 this morning and has strong support at the USD 2,300 level.
BTC’s 30-day at-the-money (ATM) implied volatility decreased from 54% to 53% (-1% WoW), while ETH’s implied volatility increased from 63% to 59% (-4% WoW). The 25-delta skew for BTC remains negative for the 0-14 day time frames, while it remains positive and slightly rising for longer durations. For ETH, the skew has also remained negative for the 0-30 day time frames, and it is slightly lower than BTC across longer time frames.
On Wednesday, the FOMC minutes provided no new guidance, with the Federal Reserve remaining data-driven, leading markets to expect 25 bps cuts in both November and December. The likelihood of a 50 bps cut has faded, with traders pricing in an 84% chance of a 25 bps cut in November and an 85% chance in December, while the probability of just one 25 bps cut this year is around 16%.
Yesterday, US CPI data for September came in higher than expected, with a monthly rise of 0.2% and an annual increase of 2.4%, exceeding the forecasts of 0.1% and 2.3%. Core CPI also saw a stronger rebound, with a monthly uptick of 0.3% and an annual rate of 3.3%, both surpassing predictions of 0.2% and 3.2%. Accordingly, rate cut expectations diminished, the USD Index rose near 102.95, and is currently trading around 102.9.
In addition to this, 258,000 Initial Jobless Claims were filed in the week ending October, exceeding the anticipated 231,000. Risk assets were hit hard, with the S&P and NASDAQ both closing around 4% lower in yesterday’s session. However, this morning, futures are trading higher than the previous close, suggesting potential for a reversal.
This weekend, attention will be on China, with a fiscal policy press conference on Saturday and a CPI data release on Sunday, potentially offering further insight into their easing cycle.
Looking ahead, key economic events next week include CHF PPI on Monday, UK CPI on Wednesday, EUR CPI and the ECB Interest Rate Decision, as well as US Retail Sales on Thursday.
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