Fed Chairman Jerome Powell avoided discussing monetary policy in remarks at a community bank conference on October 9, favoring Bitcoin’s continued progress towards $150,000.
Matt Mena, crypto research strategist at 21Shares, said in a note that this was a “strategic lapse” on Powell’s part.
He characterized the narrowing of focus as “effectively a green light for risk assets” as the US data blackout weakens the macro shocks that would normally weigh on Bitcoin and drive dovish policy expectations.
With the federal government shutdown halting major releases such as employment and CPI, traders and the Fed don’t have much solid information to justify another rate hike.
Additionally, Bitcoin recorded over $2.5 billion in inflows from October 6th to October 8th, including $1.2 billion in daily inflows on Monday, which ranks second in history and pushed the price to $126,000.
Flows slowed to $440.7 million on October 8 as rising Japanese government bond yields strengthened the dollar and encouraged tactical risk aversion.
The market is currently pricing in a 95% chance of a 25 basis point (bps) rate cut at the next FOMC meeting, according to data from the CME FedWatch tool. CME’s odds of a December rate cut are 81.5%.
According to the polymarket, there is a 71% probability that interest rates will be cut by 25 basis points in December. Meanwhile, expectations that the U.S. government shutdown will last until at least October 15 reached a record high of 88%.
Taken together, these odds reflect expectations that extended data delays due to the government shutdown will prompt the Fed to consider further easing.
Mena said:
“The market is clearly burning through the gains for the next rally, and it is structurally unlikely that liquidity will build up underneath to form an upside. Once BTC breaches $130,000, we expect it to quickly move towards $150,000, almost like a magnet.”
He added that consolidation near all-time highs will occur with both Nasdaq and Gold setting new records almost daily, reinforcing the two pillars that Bitcoin straddles.
Gold acts as a hedge against currency depreciation, reinforcing Bitcoin’s narrative as a “currency depreciation trading” asset, while Nasdaq represents a technology agency of innovation and growth.
Mena predicts that Bitcoin could reach $150,000 by the end of the year, which could be a 22% increase from current levels.
He concluded:
“Chairman Powell may have remained silent, but the expectation for liquidity is clear and the rest of the market appears to be bidding.”
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(Tag translation) Bitcoin
