📰 Why Is the Fed Raising Interest Rates Again? What’s Really Behind the October Inflation Data?
At 8:30 a.m. Beijing time tomorrow, the U.S. will release its October CPI data. Markets expect headline inflation to rise 0.3% month over month and core inflation to rise 0.2%. Although these figures would be down from September’s 0.6% and 0.3%, respectively, they would still show that price pressures in the U.S. have not fully eased. This is likely to support another Fed rate hike in December. For global capital markets, this is a modest but meaningful stress test—especially for the already weak cryptocurrency market.
Why does this news matter?
Expectations of Fed rate hikes are one of the market’s most significant headwinds, and CPI data is key evidence that can determine whether those expectations shift. The Fed’s long-term inflation target is 2%, but inflation data over the past few months has consistently exceeded that level. If October CPI comes in higher than expected, it would further strengthen the market’s view that the Fed needs to continue tightening monetary policy. Conversely, if the data is well below expectations, it could cool rate-hike expectations. Markets currently widely expect a 25-basis-point hike in December, but whether October’s CPI data is favorable or unfavorable will directly affect how strongly that expectation is held.
Market impact
For BTC and ETH, this news is negative. First, rate hikes increase borrowing costs and make risk assets—including cryptocurrencies—less attractive. Second, Fed rate hikes are usually accompanied by a stronger U.S. dollar. Since most cryptocurrencies are priced in dollars, a stronger dollar directly puts pressure on crypto prices. Historically, cryptocurrency markets have experienced a significant downturn during each Fed rate-hiking cycle. In addition, a high-interest-rate environment reduces the amount of capital flowing into stocks and cryptocurrencies, particularly institutional capital.
Trading approach
BTC and ETH are both currently in a weak consolidation phase. If October’s CPI data meets or exceeds expectations, it could put further downward pressure on the prices of both assets. If the data comes in well below expectations, it could give the market some breathing room, though the overall trend would remain unclear. In the short term, it is crucial to watch for the release of October’s CPI data. If the data is higher than expected, it is advisable to remain cautious. If it is lower than expected, short-term opportunities may be worth considering, but be mindful of the risks.
If the Fed raises rates as expected in December and the cryptocurrency market continues to fall, this view is invalidated.
This article is not sponsored by any project, and the author does not hold any of the assets mentioned.
⚠️ This is not investment advice. Forecasts are for reference only.
#CPI
$BTC $ETH $BNB
At 8:30 a.m. Beijing time tomorrow, the U.S. will release its October CPI data. Markets expect headline inflation to rise 0.3% month over month and core inflation to rise 0.2%. Although these figures would be down from September’s 0.6% and 0.3%, respectively, they would still show that price pressures in the U.S. have not fully eased. This is likely to support another Fed rate hike in December. For global capital markets, this is a modest but meaningful stress test—especially for the already weak cryptocurrency market.
Why does this news matter?
Expectations of Fed rate hikes are one of the market’s most significant headwinds, and CPI data is key evidence that can determine whether those expectations shift. The Fed’s long-term inflation target is 2%, but inflation data over the past few months has consistently exceeded that level. If October CPI comes in higher than expected, it would further strengthen the market’s view that the Fed needs to continue tightening monetary policy. Conversely, if the data is well below expectations, it could cool rate-hike expectations. Markets currently widely expect a 25-basis-point hike in December, but whether October’s CPI data is favorable or unfavorable will directly affect how strongly that expectation is held.
Market impact
For BTC and ETH, this news is negative. First, rate hikes increase borrowing costs and make risk assets—including cryptocurrencies—less attractive. Second, Fed rate hikes are usually accompanied by a stronger U.S. dollar. Since most cryptocurrencies are priced in dollars, a stronger dollar directly puts pressure on crypto prices. Historically, cryptocurrency markets have experienced a significant downturn during each Fed rate-hiking cycle. In addition, a high-interest-rate environment reduces the amount of capital flowing into stocks and cryptocurrencies, particularly institutional capital.
Trading approach
BTC and ETH are both currently in a weak consolidation phase. If October’s CPI data meets or exceeds expectations, it could put further downward pressure on the prices of both assets. If the data comes in well below expectations, it could give the market some breathing room, though the overall trend would remain unclear. In the short term, it is crucial to watch for the release of October’s CPI data. If the data is higher than expected, it is advisable to remain cautious. If it is lower than expected, short-term opportunities may be worth considering, but be mindful of the risks.
If the Fed raises rates as expected in December and the cryptocurrency market continues to fall, this view is invalidated.
This article is not sponsored by any project, and the author does not hold any of the assets mentioned.
⚠️ This is not investment advice. Forecasts are for reference only.
#CPI
$BTC $ETH $BNB
