This Friday, Wall Street holds its breath. The US Department of Labor is preparing to release inflation figures in unusual circumstances: in the midst of a government shutdown and just five days before the Fed rules on rates. For Bitcoin and crypto markets, every decimal place will count.
In brief
- The Department of Labor publishes the CPI this Friday, October 24, despite the US government shutdown.
- This unusual release comes just five days before the October 29 Fed meeting.
- Bitcoin rebounded to $111,049, buoyed by easing Sino-US trade tensions.
- Inflation above 3.1% could cancel out the rate cut anticipated by the markets.
Surprise inflation announcement worries crypto investors
The calendar is intriguing. For the first time since January 2018, US CPI inflation data will be released on a Friday. Even more surprising: this publication comes during the paralysis of public administrations.
The Ministry of Labor exceptionally recalled certain employees to ensure the dissemination of the figures, initially planned for last week.
This decision described as “unusual” by Kobeissi's Letter raises questions. Why mobilize resources in the middle of a shutdown for this specific data? The timing is all the more interesting as it precedes the Federal Reserve's monetary decision by five days. Financial markets, which move blindly without major economic reports, are now scrutinizing this figure with nervousness.
Jerome Powell has already announced a cut of 25 basis points. But this promise could be shattered if inflation exceeds 3.1%. The FOMC would then find itself stuck between the need to support the economy and the imperative to curb the rise in prices. The CME's FedWatch tool expects a total reduction of 50 basis points this year, but uncertainty lingers.
The crypto market, particularly sensitive to monetary policies, is already reacting. Jack Mallers, boss of Strike, anticipates a recovery in the face of recent banking tensions. Bad debts from Western Alliance and Zions are fueling speculation about monetary easing favorable to digital assets.
Ryan Lee, chief analyst at Bitget, confirms this analysis:
The expected 25 basis point drop could be a liquidity catalyst for crypto markets. Lower borrowing costs typically boost risk appetite, potentially triggering hikes of 5% to 10%.
Bitcoin rides on commercial optimism
Cryptos show spectacular rebound. Bitcoin climbs 3% to $111,049 as trading volumes explode 75% in 24 hours.
This euphoria coincides with the easing of trade tensions between Washington and Beijing. Donald Trump reassured the markets on Chinese customs duties, causing gold to fall from its historic peak at $4,375.
Investors are betting on a “bullish CPI” which would reinforce the rate cut scenario. THE Coinglass data reveal massive buying in derivatives, suggesting a possible short squeeze on bitcoin. Ethereum is back above $4,000, while BNB and XRP are up 3% and 4.5%, respectively.
The meeting scheduled for this week between Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng fuels optimism. It sets the stage for a possible Trump-Xi summit later this month. Analyst Ted Pillows identifies $112,000 as a crucial level: “Bitcoin is holding steady, but sentiment remains cautious,” he notes.
This favorable context is accompanied by a major institutional signal. The Fed held a historic payments innovation conference on Monday, officially welcoming crypto giants for the first time.
Sergey Nazarov of Chainlink, the bosses of Circle, Paxos and Coinbase participated in the debates alongside BlackRock and JPMorgan. A radical change after years of regulatory mistrust.
The release of the CPI this Friday will determine the direction of the crypto markets for the coming weeks. Between geopolitical appeasement and monetary uncertainty, bitcoin is navigating through troubled waters. But the historic opening of the Fed to the sector could permanently redefine the rules of the game.
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