Key Takeaways
- • Digital asset investment products have shed $434 million so far this week, according to a new CoinShares report, as hotter-than-expected US data strengthened the case for the Federal Reserve to keep rates higher for longer.
- • US CPI rose 3.7% year-on-year in September, above the 3.6% consensus, with monthly inflation at 0.6%. Gasoline prices jumped 9.1% month-on-month and accounted for about half of the headline increase.
- • Core CPI rose 0.3% month-on-month and 2.6% year-on-year, indicating underlying price pressures have not fully eased.
- • US retail sales rose 0.8% in September versus forecasts of around 0.3%, and August's gain was revised up to 1.3%.
- • CME FedWatch data shows an 82.8% probability the Fed holds at 375–400 bps, while odds of a 25-basis-point hike to 400–425 bps stand at 17.2%. CoinShares expects Bitcoin to remain volatile and range-bound near term.
Summary
Digital asset investment products have recorded $434 million in outflows so far this week, according to a new report from CoinShares. The outflows coincide with September inflation data that exceeded forecasts and resilient retail sales, both of which have reinforced expectations that the Federal Reserve will keep interest rates elevated for longer.
The Bureau of Labor Statistics data showed US CPI rose 3.7% year-on-year in September, above the 3.6% consensus, while monthly inflation reached 0.6%. Gasoline prices rose 9.1% over the month and accounted for about half of the headline increase. Core CPI rose 0.3% month-on-month and 2.6% year-on-year, which CoinShares says shows underlying price pressures have yet to ease fully. Consumer demand is adding to the challenge: retail sales increased 0.8% in September, well ahead of forecasts of around 0.3%, and gasoline station sales rose 6.4%.
CoinShares argues that this combination of resilient demand and persistent price pressure could limit the Fed's scope to loosen financial conditions. Higher rates lift real yields and reduce the appeal of assets that generate no regular income, while tighter monetary conditions can drain liquidity from riskier investments. Bitcoin and other digital assets have come under pressure as markets reassess the path of US rates.
CME FedWatch data shows markets still view a hold at the 375–400 bps range as the most likely outcome for October, with an 82.8% probability, while a 25-basis-point hike to 400–425 bps stands at 17.2%. Futures markets have nonetheless shifted toward a more hawkish outlook, with traders increasingly anticipating another increase before year-end. According to CoinShares, the key question is now when further tightening would come rather than whether policy will ease.
CoinShares expects Bitcoin to remain volatile in the short term but says the current macro picture does not establish a lasting downtrend. A more supportive environment would require evidence of cooling inflation or weakening activity that reduces the need for further tightening. Bitcoin rallied ahead of the US equity open, trading near $83,000 and gaining over 2% in the prior 24 hours. CoinShares suggests investors may focus on strategic allocation goals rather than reacting to individual economic releases.
The Bureau of Labor Statistics data showed US CPI rose 3.7% year-on-year in September, above the 3.6% consensus, while monthly inflation reached 0.6%. Gasoline prices rose 9.1% over the month and accounted for about half of the headline increase. Core CPI rose 0.3% month-on-month and 2.6% year-on-year, which CoinShares says shows underlying price pressures have yet to ease fully. Consumer demand is adding to the challenge: retail sales increased 0.8% in September, well ahead of forecasts of around 0.3%, and gasoline station sales rose 6.4%.
CoinShares argues that this combination of resilient demand and persistent price pressure could limit the Fed's scope to loosen financial conditions. Higher rates lift real yields and reduce the appeal of assets that generate no regular income, while tighter monetary conditions can drain liquidity from riskier investments. Bitcoin and other digital assets have come under pressure as markets reassess the path of US rates.
CME FedWatch data shows markets still view a hold at the 375–400 bps range as the most likely outcome for October, with an 82.8% probability, while a 25-basis-point hike to 400–425 bps stands at 17.2%. Futures markets have nonetheless shifted toward a more hawkish outlook, with traders increasingly anticipating another increase before year-end. According to CoinShares, the key question is now when further tightening would come rather than whether policy will ease.
CoinShares expects Bitcoin to remain volatile in the short term but says the current macro picture does not establish a lasting downtrend. A more supportive environment would require evidence of cooling inflation or weakening activity that reduces the need for further tightening. Bitcoin rallied ahead of the US equity open, trading near $83,000 and gaining over 2% in the prior 24 hours. CoinShares suggests investors may focus on strategic allocation goals rather than reacting to individual economic releases.
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