According to the latest meeting minutes from the Federal Reserve (Fed), the central bank’s victory over inflation is not yet certain. This, combined with last Friday’s strong employment data, has increased the likelihood of a 25 basis point rate cut in November from 67.9% to 83.7%.
U.S. Markets Rise While Crypto Struggles
As per QCP Capital’s daily market analysis, all eyes are on the upcoming Consumer Price Index (CPI) and Producer Price Index (PPI) reports, which are critical in assessing the strength of the U.S. economy. These data points, combined with earnings reports from major banks like JPM and WFC, will provide insight into inflation cooling and the state of the economy.
While U.S. stock markets surged overnight, reaching new highs in the S&P 500, the same optimism wasn’t shared by the crypto market. Bitcoin (BTC), currently priced at $60,590, and Ethereum (ETH) at $2,384, are facing renewed selling pressure, partly driven by Silk Road-related BTC sales and PlusToken-linked ETH liquidations.
However, despite the market pressure, analysts at QCP Capital maintain that if Bitcoin holds above the $60,000 support, the anticipated “Uptober” rally could still materialize.
Key Data and Year-End Outlook
According to analysts, the key risks for markets this week include the U.S. CPI and PPI reports, along with major bank earnings. These reports will play a crucial role in guiding the Fed’s next rate decision. As markets anticipate further rate cuts, investors are positioning themselves to lock in gains at these low levels and prepare for a potential year-end rally. Analysts caution that if the Fed adopts a less dovish stance, volatility could persist.
QCP Capital believes that the combination of a cooling inflation process and a strong labor market in the U.S. might lead investors to adopt a more cautious approach in the coming months. The direction of the markets will likely hinge on the outcomes of these critical data points.
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Bitcoin, Ethereum, QCP Capital, inflation, Fed rate cut, Uptober
