The U.S. Consumer Price Index (CPI) in September was overall slightly higher than expected, and the number of unemployed people also climbed higher, adding uncertainty to the Federal Reserve's (Fed) next interest rate cut. U.S. stocks and Bitcoin fell simultaneously.
CoinGecko data shows that Bitcoin once fell below the US$60,000 mark in the early morning of this day (11th), hitting a minimum of US$58,935. It rebounded to US$60,465 at the time of writing, a drop of 0.5% in the past 24 hours.
The four major U.S. stock indexes all closed down. The Dow Jones fell 0.14% to close at 42,454.12 points; the S&P 500 fell 0.21% to close at 5780.05 points; the Nasdaq fell 0.05% to close at 18282.05 points; the Philadelphia Semiconductor Index fell 0.76%. Closed at 11805.22 points.
Although the economic outlook is full of uncertainty, analysts remain optimistic about Bitcoin's long-term trend, especially considering possible changes in monetary policy and the upcoming U.S. presidential election.
U.S. inflation data higher than expected
The latest data from the U.S. Bureau of Labor Statistics (BLS) showed that the consumer price index (CPI) increased by 0.2% monthly in September, higher than market expectations of 0.1%. This slight rise was mainly affected by rising food prices. However, the CPI index rose by 2.4% year-on-year in September. Although slightly higher than expected, the increase was the lowest in three years, indicating that the trend of cooling inflation remains broadly unchanged.
At the same time, the U.S. Department of Labor (DOL) released data showing that the number of people applying for unemployment benefits for the first time last week increased to 258,000, a new high in more than 1 year, further deepening the uncertainty of the economic outlook.
Still, expectations remain high that the Fed will continue to cut interest rates. According to the CME Group's FedWatch tool, the market believes there is an 89.1% chance that the Fed will cut interest rates by 1 point (25 basis points) next month.
21Shares research analyst Leena ElDeeb pointed out that Bitcoin’s sensitivity to inflation data and monetary policy has increased in recent years. He said:
Cutting interest rates helps lower borrowing costs and is therefore generally bullish for Bitcoin. We expect that as the impact of the recent geopolitical situation gradually dissipates, more funds will gradually return to the market.
Institutional Investment and the U.S. Election
Many analysts believe November's U.S. presidential election will be an important factor affecting markets. David Duong, head of research at Coinbase, said institutional investors may pay more attention to the cryptocurrency market next, hoping to trade on market volatility after the election results.
David Duong shared his thoughts on how the US election may impact the cryptocurrency market:
We believe that the market reaction in the fourth quarter will generally show a "neutral to positive" trend. Even if there is post-election selling pressure, institutional investors may get in on the upside potential of cryptocurrencies.
In addition, David Duong emphasized that the impact of the Federal Reserve's shift to loose monetary policy in September and China's recent stimulus policies on market liquidity may take months to fully manifest.
Overall, as the election approaches, we remain optimistic about the prospects of the cryptocurrency market, especially at the regulatory level.
"Inflation in the United States heats up, and Bitcoin once fell below $60,000! Analysts are optimistic about the market outlook for these reasons." This article was first published on (Block Guest).
