In September, U.S. inflation rose more than expected, with the Consumer Price Index (CPI) increasing by 0.2%, slightly above economist forecasts of 0.1%. On a year-over-year basis, the CPI climbed 2.4%, compared to an expected 2.3%. Core CPI, which excludes volatile food and energy costs, also rose 0.3% for the month, in line with August’s numbers and slightly above the 0.2% forecast. Year-over-year, core CPI increased by 3.3%, surpassing the expected 3.2%.

The inflation data reduced expectations of further rate cuts from the U.S. Federal Reserve. While the Fed surprised markets in September by cutting rates by 50 basis points (larger than the expected 25), recent inflation and employment data have cooled hopes for another big cut in November.

According to CME FedWatch, the chance of a 50 basis point rate cut in November has dropped to zero, with even a 26% chance that the Fed may not cut rates at all.

Cryptocurrency markets reacted negatively to the news, with Bitcoin (BTC) falling nearly 4%, dropping to around $59,000, a level not seen since the Fed’s surprise rate cut in mid-September.

However, the dip below $60,000 was shortlived, with Bitcoin recovering quickly, and already back to $62,815.

Source: BNC Bitcoin Liquid Index

Adding to the crypto sector’s struggles, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Cumberland DRW, a major digital asset market maker, accusing it of trading crypto assets as securities without registering as a securities dealer. This follows a series of regulatory actions, including the Department of Justice charging several market makers and individuals for market manipulation. SEC Chair Gary Gensler has also taken a hard stance on the crypto industry, labeling it rife with fraud and dismissing the idea of Bitcoin or crypto being used widely as a form of payment. These regulatory pressures, combined with inflation concerns, have led to increased headwinds for the crypto market.

One reason for caution is Bitcoin’s position below its 200-day moving average (MA), a critical technical indicator. Historically, when Bitcoin trades below the 200-day MA, it signals bearish momentum and the potential for further declines.

Analysts highlight that for bullish sentiment to return and for new highs to be considered likely, Bitcoin needs to not only surpass the 200-day MA but also establish it as a strong support level. This would indicate a significant shift in market momentum from bearish to bullish.

Three events could provide that tipping point, either bullish or bearish, further rate cuts by the United States Federal Reserve, a lack rate cuts, an increase in global liquidity, and the US government selling more seized Silk Road Bitcoin.

HSBC was forecasting a 25-basis-point cut in November and another 25 bps in December, January, March, May, and June for six consecutive 25-bps rate cuts, according to the ForexLive report. It’s expected that further rate cuts will be bullish for risk assets. 

Unfortunately, last week’s inflation numbers make those rate cuts look much less likely as reported above.

Global liquidity refers to the amount of money circulating within the global economy, often measured by the M2 money supply. The M2 money supply includes physical cash, checking and savings deposits, money market accounts, retail mutual funds, and time deposits below $100,000, providing a broader view of the liquid assets available in a country’s economy.

When central banks around the world make more money accessible in the financial system, they often do so by lowering interest rates or using quantitative easing (QE). QE is a process where central banks purchase government bonds and other securities, injecting more money into the economy to stimulate growth.

An increase in global liquidity can boost spending on so-called “risk assets” like Bitcoin. This makes it crucial for strategic investors to track shifts in global liquidity, as they can have a direct impact on Bitcoin’s price.

Historically, Bitcoin bull markets have aligned with periods of rapid global liquidity expansion. Some people see Bitcoin as a potential alternative to the traditional central banking system due to its fixed monetary supply. This is why many investors closely monitor Bitcoin prices alongside fluctuations in global liquidity.

Source: X

On October 8, the U.S. Supreme Court declined to hear a case involving the ownership of 69,370 BTC (approximately $4.38 billion) that the government had confiscated. Battle Born Investments had requested a review, asserting that it had acquired rights to the seized Bitcoin through a bankruptcy estate, but the court’s refusal effectively leaves the government in control of the assets and able to sell them, which the U.S. government has done in the past.

Meanwhile, CryptoQuant reports that Stablecoin market capitalization has reached $169 billion, with a notable rise in liquidity, primarily from USDT and USDC. Historical data shows a strong correlation between increased stablecoin balances on exchanges and Bitcoin price surges. The influx of stablecoins, alongside a spike in whale transactions and on-chain Bitcoin activity, suggests potential for a Bitcoin price rally in the coming weeks. October’s historical trends and upcoming catalysts, like the U.S. presidential election, could also support this bullish outlook for Bitcoin.

Several veteran traders and analysts support this bullish outlook. Peter Brandt has predicted on X that Bitcoin could reach $135,000 by August/September 2025. Brandt said based on the historical pattern of Bitcoin’s four-year halving cycles, it’s the second half where Bitcoin sees significant price increases. However, Brandt cautions that if Bitcoin falls below $48,000, which is around 22% below the current price, it could invalidate this prediction. This $48,000 level is considered a critical threshold for sustaining the bullish outlook.

Source: X

Fellow veteran trader and analyst Bob Loukas shared a similar view on X, writing that “Sometimes a script looks too perfect, it’s hard to believe. Bitcoin closes the second year of the 4 year Cycle next month, entering the third and historically explosive year of the Cycle. An 8 month base has been built, sentiment reset, and rates are easing. I mean, the script is perfect.”

Source: X

And finally, veteran technical analyst Dave the Wave, shared his bullish view, also on X, outlining a technical target of $90,000 before Xmas. What a xmas present that would be. 

Source: X

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