Bitfire Research has indicated that a decline in inflation and employment figures has significantly reduced the likelihood of an interest rate increase in October. However, long-term Treasury yields hovering around 5.3% still limit overall risk tolerance.
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Recent trends in U.S. inflation and job data have notably diminished expectations for a rate hike this October, although persistent high Treasury yields are keeping liquidity tight. Here’s the latest evaluation from Bitfire Research:
Bitfire Research suggests the digital asset market is now in a crucial holding pattern. As U.S. inflation and employment reports show easing trends, expectations of an October rate hike have sharply declined, while higher long-term Treasury yields continue to limit risk appetite.
On Sept. 30, U.S. core PCE inflation rose by 3.0% year-over-year, falling short of the anticipated 3.3%, and headline PCE inflation registered at 3.4%. In employment news, nonfarm payrolls saw an increase of about 29,000 as of Oct. 2, significantly lower than the expected gain of 84,000, while the unemployment rate edged up to 4.2%. Data from CME FedWatch reflects that the predicted chance of a 25-basis-point hike at the Oct. 28 meeting dropped from around 66% to approximately 22% by the end of the week. Polymarket estimated this probability at 18%, as market sentiment increasingly aligns with maintaining the current rates in October.
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Despite this shift in rate projections, the overarching liquidity pressure persists. The yield on the 10-year U.S. Treasury rose to between 5.26% and 5.29% last Friday. Spot Bitcoin ETFs attracted approximately $510 million in net inflows across the four days from Sept. 28 to Oct. 1, a significant decline from the roughly $23.9 billion influx seen the previous week. Institutional interest appears to have shifted from aggressive buying to a more cautious approach, while spot Ether ETFs have experienced net outflows, prompting investors to question whether capital is merely reallocating among assets or exiting the market entirely.
Bitfire Research identifies the upcoming CPI release on Oct. 14 and the FOMC meeting on Oct. 28 as crucial turning points. Should the CPI align with the cooling trend evident in PCE, markets may further anticipate a rate hold in October and shift focus to December discussions. Conversely, any surge in inflation could reintroduce hike expectations. Factors such as oil prices, long-term yields, and geopolitical situations in the Middle East will also serve as key indicators regarding actual liquidity levels.
On the regulatory side, the U.S. Treasury is inviting feedback on the implementation framework for Section 3 of the GENIUS Act, with comments due by approximately Oct. 19. This legislation is set to become effective on Jan. 18, 2027. Additional insights from the SEC and CFTC concerning tokenization and the handling of related digital asset activities will be vital for understanding the compliance landscape for institutions. In the Ethereum ecosystem, around 1.5 million ETH is presently in the staking entry queue, compared to roughly 850,000 ETH in the exit queue, indicating a net positive demand for staking. Meanwhile, action surrounding Robinhood Chain has slowed, with the market closely monitoring for indications of a second wave in on-chain activity.
From a technical perspective, Bitcoin seems to be at a crossroads following a lengthy period of consolidation, primarily trading between $82,600 and $87,100 during the week. A consistent move above $84,000 coupled with increased volume could pave the way toward a range of $87,000 to $90,000; conversely, a drop below $82,600 may expose the $80,000 threshold. The seven-day moving average stands at around $84,300, while the 20-day moving average hovers near $82,800, keeping the spot price above both metrics. The 14-day RSI is close to 62, indicating neutral-to-strong momentum with no evident bearish divergence yet. The 20-day Bollinger Band has a midline near $82,800, upper band around $89,200 and lower band at approximately $76,400. Current prices are situated between the midline and upper band, with volatility remaining high.
About Bitfire Group
Bitfire Group Holdings Limited (01611.HK) is a premier digital asset financial services provider in Asia, dedicated to establishing the first private-banking-grade digital asset stewardship in the Asia-Pacific region. Holding SFC Type 1, 4, and 9 licenses issued by the Securities and Futures Commission of Hong Kong, the Group offers compliant, secure, and efficient one-stop digital asset services tailored for institutional clients and high-net-worth individuals.
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