- BTC retested $66,000 following better-than-expected August inflation data
- U.S. Labor Market Update Could Set Market Direction Next
Bitcoin (BTC) rose slightly and retested $66,000 on Friday after a softer reading of the US Fed’s favorite inflation data – the Core PCE (personal consumption expenditures) index. This index tracks U.S. inflation without the noise of fluctuations in food and energy prices.
The Core PCE index for August was better than expected, up 2.6% year-on-year (yoy). This was contrary to market expectations of 2.7%.
Weak inflation data boosted markets as speculators raised prices. odds of an additional 50 bp (basis points) rate cut from the Fed in November.
Source: CME FedWatch
Next Market Catalyst
The weak inflation data meant that the Fed would now focus on the situation in the US labor market, particularly the unemployment rate, when it adjusted its pace of interest rate cuts accordingly.
Ergo, upcoming updates on the US labor sector will impact the next direction of the market, noted trading firm QCP Capital.
Excerpt from the cabinet weekend briefing of September 28 read,
“As we approach next week, the focus will be on upcoming labor market indicators including JOLT, ADP, and the U.S. unemployment rate.”
The key updates We will have to be wary of the JOLT (Job Openings and Labor Turnover Survey) and the employment situation scheduled for November 1 and 4. Projecting the potential impact of the updates on the market, QCP Capital added:
“Strong performance across these metrics could strengthen the case for a 50 basis point cut in November, further propelling risk assets.”
If so, BTC could further rise to $70,000 after the recent bullish change in market structure. Especially after recovering the 200-day MA (moving average).
Source: Daan Crypto/X
The takeoff could also benefit Ethereum (ETH). In fact, ETH has outperformed BTC since the Fed pivot.
Thus, an additional macro tailwind could extend ETH’s remarkable recovery on the charts. In fact, according to market analyst Benjamin Cowen, ETH could also reach the psychological level of $3,000.
Source: Cowen/X
That said, major digital assets have seen a surge in demand from U.S. investors. This week, US BTC ETFs saw inflows of $1.11 billion, the largest weekly inflows since July 19.
A similar, albeit limited, investor appetite has also been seen for ETH ETFs. The products attracted $84.6 million in entries, the largest weekly demand since August 9. If the trend continues, the price targets of $3,000 per ETH and $70,000 per BTC could be achievable.
