Bitcoin [BTC] saw a slight increase and revisited the $66k mark on Friday as a result of a milder reading from the U.S. Federal Reserve’s preferred inflation gauge – The Core PCE Index (Personal Consumption Expenditure). This index monitors inflation in the U.S. while excluding the volatile food and energy price movements.
The Core PCE index for August surpassed expectations, showing a year-on-year increase of 2.6%, contrary to the projected 2.7%.
The lower inflation figure boosted market sentiment, with speculators now pricing in higher chances of an additional 50 bps (basis points) Fed rate cut in November.
What to Expect Next
The lower inflation data implies that the Fed will now shift its focus to the status of the U.S. labor market, notably the unemployment rate, to determine the trajectory of interest rate adjustments.
As a result, the upcoming updates on the U.S. labor sector will play a crucial role in shaping the market’s next moves, as highlighted by trading firm QCP Capital.
In their weekend analysis on 28 September, QCP Capital emphasized,
“Heading into the upcoming week, all eyes will be on forthcoming labor market indicators, such as JOLTs, ADP, and the U.S. unemployment rate.”
Of particular interest are the JOLTs (Job Openings and Labor Turnover Survey) and the employment situation reports scheduled for 1 and 4 November. QCP Capital suggested that a strong performance in these metrics could strengthen the case for a 50bps rate cut in November, further boosting risk assets.
If this scenario unfolds, BTC could climb towards $70k post a recent positive market shift, especially upon reclaiming the 200-day Moving Average.
Such upward movement could also benefit Ethereum [ETH], which has been outperforming BTC since the Fed’s policy shift.
Therefore, additional macroeconomic support could extend ETH’s impressive recovery, potentially reaching the $3000 mark, according to market analyst Benjamin Cowen.
Meanwhile, there was increased interest in top digital assets from U.S. investors. BTC ETFs recorded $1.11 billion inflows this week, marking the highest weekly inflows since 19 July.
A similar albeit more moderate demand was seen in ETH ETFs, with $84.6 million inflows – the most significant weekly surge since 9 August. Sustained investor interest could make the price targets of $3k for ETH and $70k for BTC attainable.