Bitcoin has slowly recovered from its price drop in the past three days, and the overall market price has remained stable. Currently, the stock market and the crypto market are fluctuating according to the general economic data. Since there are not many surprises in this week's general economic data, the overall price change is the same as last week. Bitcoin remains at US$62,000 and Ethereum is at US$2,400. Investors are speculating whether the US economy will decline, whether the job market is stable, and whether the Fed is willing to take on higher price inflation risks to cut interest rates to avoid recession risks.

If we want to speculate on the Fed's thoughts on interest rate policy, institutional investors no longer pay attention to the simple consumer price index (CPI), but focus on the details of the consumer price index, which makes the situation more complicated. It also makes the investment difficulty of the US stock and cryptocurrency markets enter another script after the Fed announced a two-point interest rate cut. The difficulty has increased a lot. What should the crypto market focus on in the future?

It was mentioned earlier that the Fed is betting on "continued decline in energy prices" and adopting two parallel strategies of "preventive interest rate cuts". First of all, the Fed actually believes that the previously strong US economy has shown some signs of exhaustion. From manufacturing, consumer confidence index to employment report, there is a trend of weak growth. However, at this time, international crude oil prices continue to fall, even falling below US$70, a drop of more than 40% compared to US$120 in 2022.

It is worth noting that the Bitcoin spot ETF is still in a state of adjustment this week. Only after the impressive employment data was released on October 7, the possibility of a soft landing of the US economy increased significantly, which encouraged Bitcoin to rise to US$64,000 and pushed the net inflow of funds to US$230 million on that day.

However, it was later reported that the intensified conflict in the Middle East might affect oil facilities, and the international crude oil price rebounded to US$78. The expected inflation caused by the rise in energy prices might make a comeback, undermining the original expectation of interest rate cuts. The price of Bitcoin fell from US$64,000 to US$59,000, triggering a wave of forced liquidations by multiple parties.

Subsequently, a ceasefire agreement was reached in the Middle East, causing crude oil prices to fall back to the $74 range, and Bitcoin prices also rebounded to $62,000, suggesting that the price of cryptocurrencies is indeed partly dependent on changes in crude oil prices. However, in the following days, Bitcoin spot ETFs have almost experienced sporadic net outflows of funds, and market investors are constantly speculating on the Fed's subsequent interest rate policy direction.

Oil prices and employment reports are key areas of focus

Under this assumption, the Fed certainly chose to cut interest rates to prevent a potential recession crisis. In particular, the manufacturing index and employment reports in the past two months are no longer as prosperous as the tightening labor market in the past. Although the overall situation is still very stable, it is no longer It's as good as before. In addition, U.S. manufacturing activity continues to decline. The Fed also sees that the unemployment rate is 4.1%, which has increased significantly compared with 3.4% in April this year. At this time, it chooses to cut interest rates and slowly explore the softness. Landing is the wiser choice.

Since the situation in the Middle East is relatively stable now, there is little chance of oil facilities being attacked in the short term. In addition, OPEC's plan to increase oil production will continue. It is foreseeable that energy-related prices will continue to fall. The Fed will naturally have more chips to rely on falling energy prices to offset the potential inflationary impact brought about by interest rate cuts. In other words, even if the core price index excluding energy and food continues to rise, as long as energy prices fall, the overall inflation in the United States can remain stable.

The price index just released is also very interesting. Although the overall monthly increase continued to maintain at 0.2%, the annual growth rate is still stuck at 2.4%, and the core price index also maintained at 3.3% year-on-year, the monthly increase rate of the rental index was only 0.2%, which was a significant slowdown compared to the previous 0.5%. The Fed does not need to worry about the core inflation index and only needs to maintain the original script. Under the premise of a high base period, the annual price increase rate will sooner or later return to below 2%, making the chances of a soft landing increasingly greater.

In this case, the Fed will definitely choose to rely on "falling oil prices" to protect "employment". The Fed's current biggest goal is to prevent the US economy from falling into recession. Assuming a soft landing can be successfully achieved, this term of officials will gain a lofty historical position. Therefore, the possibility of subsequent interest rate cuts is definitely far greater than maintaining the same, and raising interest rates is an impossible option. Therefore, no matter how the price index opens, the medium- and long-term trend will be to push up the prices of risky assets, and the price of Bitcoin will rise as interest rates cut.

The current reasonable price of Bitcoin is still set at US$70,000. However, it will not develop linearly, but must break through a certain interest rate cut range before it will react. It is expected that the price of Bitcoin will climb higher after the US benchmark interest rate falls below the neutral interest rate of 3.50%. However, it also involves whether the US economy is in recession. Assuming it falls into a recession, the amount of funds flowing into Bitcoin will also decrease, and the price performance will naturally not be very good. However, if the soft landing is successful and the interest rate cuts continue, Bitcoin has a high probability of rising to US$100,000.

There will still be intensive speeches from Federal Reserve officials next week, but the market's expectations for the next rate cut are relatively unified, and this information will have limited impact on the market.

The election is approaching, and the market needs more election information to make a decision. Currently, polls show that Harris has a 2% higher approval rating, while Polymarket shows that Trump has a 10% higher approval rating. Crypto's innovation in the traditional world is still developing.

Next week's big events:

10/14 Monday

2026 FOMC voting member and Minneapolis Fed President Kashkari attends expert panel discussion (21:00)

Tuesday, October 15

Federal Reserve Board Governor Waller speaks on the economic outlook (03:00)

2024 FOMC voting member and San Francisco Fed President Mary Daly speaks at an event hosted by New York University's Stern School of Business (23:30)

Wednesday, October 16

Federal Reserve Board Governor Kugler delivered a speech (01:00)

UK September CPI (14:00)

Thursday, October 17

Eurozone September CPI (17:00)

ECB announces interest rate decision (20:15)

Initial jobless claims in the United States this week (20:30)

U.S. September retail sales monthly rate (20:30)

ECB President Lagarde holds monetary policy press conference (20:45)

Friday, October 18

Kashkari, 2026 FOMC voting member and President of the Minneapolis Fed, delivered a speech (22:00)

The crypto market remained volatile in October, with the IV of major Bitcoin maturities currently at a medium level, and a significant decline in IV before and after the election.