There was no 'Uptober' this week either. The price of Bitcoin showed significant volatility, dropping to around $58,000 at one point last week before rebounding.
Looking at the weekly price, it fell about 0.3%, so it could be considered a flat trend, but it is difficult to simply say that given the wide range of ups and downs. It rose to around $64,000 on Monday, then fell about 8%, and then rose again by 8%.
There were several negative factors during the week. The fact that Bitcoin from the Satoshi Nakamoto era started moving again and rumors that the US could sell the Bitcoin it holds on the market were circulating.
However, the core of the volatility was the US inflation data. The US Consumer Price Index (CPI) released on Thursday was about 0.1%p higher than expected, adding to market jitters.
Previously, I explained that the US non-farm payroll data released on the 4th (local time) significantly exceeded Wall Street's expectations, raising questions about whether the Federal Reserve's 50bp rate hike in September was an excessive measure. The CPI data this time also worked in the same context.
Some are skeptical about the Fed's actions. At the September FOMC, the Fed acknowledged that it had brought inflation under control and that employment was now the problem, so it lowered rates by 50bp, but in just a month, the inflation rate has risen again and employment has shown a quite good performance. None of the things the Fed pointed out seem to be correct.
The Fed lowered rates by 50bp, but the possibility of 'rate freeze' emerges within a month
The direct trigger for the drop in Bitcoin prices was the remarks of Raphael Bostic, President of the Federal Reserve Bank of Atlanta, after the CPI release. In response to questions about recent employment and inflation data, he said "we are open to the possibility of a 25bp rate cut or keeping rates unchanged at the November FOMC, depending on the flow of economic outlook data." This suggests the possibility that they may not cut rates further after the big 50bp cut just before.
At the September FOMC, Fed officials forecast a total of 100bp in rate cuts by the end of the year. Since they had already cut 50bp in September, the market's dominant view was that they would cut 25bp each in November and December FOMC. But if they don't cut rates in November, the total cut would be 75bp, not 100bp.
The reason why Bitcoin prices did not show much volatility immediately after the CPI data was released, but reacted belatedly 10 days later, is here.
The sudden plunge was resolved within a day. This is because the US Producer Price Index (PPI) released on the 11th (Friday) was lower than expected. Bitcoin prices also started to rise from the release of the PPI data. Altcoin prices, which had briefly shown signs of a crash, also began to rebound quickly.
Even Ethereum, which had been sluggish recently, showed a favorable on-chain flow with a 21% increase in daily active addresses. Cryptocurrency investment experts also pointed out that a reverse head-and-shoulders pattern, one of the bullish patterns, has appeared in the altcoin season index.
Amid the macroeconomic and geopolitical crises, altcoin prices are showing strength in some coins, rather than the one-sided weakness of the past. There are many opinions that Bitcoin prices need to break above $64,700 to expect further upside.
Trump's rising tide... Will the WLFI token be sold out?
This week, it is necessary to closely monitor the price of World Liberty Financial (WLFI), whose public sale starts on the 15th (local time). WLFI is a DeFi token created by Donald Trump, the Republican presidential candidate, and his family. Since the Middle East conflict flared up in early October, Trump's approval rating has been on the rise, so there is a high possibility of active token purchases. If Trump is elected, it will become a DeFi token created by the US President, so it can be considered a kind of meme coin.
The initial sales volume is worth $300 million. If this token is sold out, the dormant expectation of Trump's election may affect the prices of other cryptocurrencies.
This week, except for the 17th (Thursday), there are no major macroeconomic indicators to be released. On that day, around 9pm, the European benchmark interest rate, US September retail sales, and US new jobless claims will be released in succession.
Based on the current trends, it does not seem that there will be a shocking change in indicators this week. However, there may be additional voices dissenting from the Fed, like Raphael Bostic of the Atlanta Fed, after this week's macroeconomic data is released. It will be necessary to respond to the volatility arising from that.
