Key Points
- Bitcoin (BTC) retested the $66k mark following positive U.S inflation data.
- Upcoming U.S labor market updates could influence the next market direction.
Friday saw Bitcoin (BTC) edge higher and retest the $66k level. This was after a softer reading from the U.S Federal Reserve’s preferred inflation data, the Core PCE Index. This index tracks U.S inflation excluding fluctuations in food and energy prices.
The August Core PCE index reading was better than expected, with a year-on-year increase of 2.6%, lower than the anticipated 2.7%. This lower inflation data led to market boosts as speculators priced higher chances of another 50 basis points Fed rate cut in November.
Next Market Catalyst
The low inflation data implies that the Fed’s focus will now be on the U.S labor market’s status. Specifically, the unemployment rate will be a significant factor when adjusting the pace of interest rate cuts.
Trading firm QCP Capital noted that upcoming U.S labor sector updates will influence the next market direction. Key updates to watch include the Job Openings and Labor Turnover Survey and employment situation scheduled for 1 and 4 October. QCP Capital suggested that strong performance in these metrics could support a 50bps cut in November, further propelling risk assets.
If this scenario plays out, BTC could potentially rise even higher towards $70k, especially after reclaiming the 200-day Moving Average. Ethereum (ETH) could also benefit from this lift-off. In fact, ETH has been outperforming BTC since the Fed’s pivot.
An additional macro tailwind could extend ETH’s remarkable recovery on the charts. Market analyst Benjamin Cowen suggested that ETH could reach the psychological level of $3000.
This week, U.S BTC ETFs saw $1.11 billion inflows, the largest weekly inflows since 19 July. ETH ETFs also saw increased investor appetite, attracting $84.6 million inflows, the largest weekly demand since 9 August. If this trend continues, the $3k per ETH and $70k per BTC price targets could be possible.
