Fed decision and Powell's speech coming: This Thursday's major macro events may trigger fluctuations in the crypto market.

This week, the United States will face four significant economic events, including the FOMC interest rate decision, Powell's press conference, the number of initial jobless claims, and PCE data, which will dominate the fluctuation of the crypto assets market. The market generally expects the Fed to cut interest rates again by 25 basis points to 4.00%, but Powell's policy tone and labor market data will determine the liquidity outlook for Bitcoin. In the context of persistent inflation and the ongoing government shutdown, traders need to be wary of the dramatic fluctuations in crypto asset prices driven by macroeconomic data.

Fed Actions: FOMC Decisions and Powell's Remarks Become the Focus

This week's macroeconomic agenda is exceptionally tight. Despite the U.S. government being shut down for nearly 30 days and the uncertainty surrounding economic data releases, the Fed's policy direction remains the primary focus of the market.

1. FOMC Interest Rate Decision: 96.7% probability of a 25 basis point rate cut

• Key date: October 29 (Wednesday), the FOMC will announce its Interest Rate decision. This is particularly noteworthy as it falls five days after the September CPI release.
• Market Expectations: According to data from the CME FedWatch Tool, interest rate bettors believe there is a 96.7% probability of a 25 basis point cut to 4.00%.
• Impact: The interest rate cut decision will directly affect market liquidity, risk appetite, and trading behavior across all markets, which is crucial for risk assets such as Bitcoin.

(Fed interest rate cut probability | Source: CME FedWatch tool)

2. Powell's press conference: A barometer for policy outlook.

Half an hour after the release of the FOMC data, Fed Chairman Powell will hold a press conference. The market's focus on Powell's “dot plot” and tone may even surpass the interest rate decision itself.

• Focus: Analysts believe that his remarks will “shape the interest rate cut expectations for 2025” (the market has priced in 2 to 3 times), which may trigger fluctuations midweek. Traders will closely interpret Powell's speech to find clues about the Fed's future policy outlook.
• End of Quantitative Tightening (QT): It is noteworthy that Powell previously stated that the Fed is approaching the point of stopping the reduction of the balance sheet (QT), where bank reserves reach “slightly above the level we consider consistent with adequate reserve conditions.” The end of QT means a relief of liquidity tightening, which is a long-term positive for the crypto market.

3. Labor and inflation data: Insights into economic health.

In addition to interest rate policy, the labor market and inflation data released this week will provide further insight into the health of the US economy.

Initial Claims for Unemployment Benefits

• Date: October 30 (Thursday)
• Importance: The U.S. labor market has become a key factor influencing the macro trends of Bitcoin. This data reflects the number of citizens who applied for unemployment insurance for the first time last week.
• Impact of Government Shutdown: Although the Labor Department has suspended weekly reports, state-level data shows that since the government shutdown on October 1, the number of federal employees filing initial claims for unemployment benefits has surged by 1,200%. In the week ending October 11, the number of federal workers applying reached 7,244, the highest level since the government shutdown in 2019. Additionally, the number of continuing claims increased by 9% to 9,430, the highest point in 3.5 years.

4. PCE Data: The inflation indicator most closely watched by the Fed

• Focus: The personal consumption expenditures (PCE) data for September is the Fed's most closely watched inflation indicator.
• Inflation Stickiness: The year-on-year PCE inflation rate in the U.S. for August was 2.7%, higher than in July and in line with expectations. Analysts expect that since PCE remains above the Fed's target (core PCE at 2.9%, median around 3.3%), the Fed may keep interest rates unchanged in October due to inflation stickiness (although the market expects rate cuts).

Market Impact and Bitcoin Trend Analysis

Traditional risk assets and digital currencies typically respond quickly to U.S. economic events, especially changes in monetary policy.

• Interest Rate Cut Boost: Expectations of an interest rate cut can boost market sentiment, as lower borrowing costs and increased liquidity often benefit speculative assets such as Bitcoin.
• Current Price: As of the time of writing, the trading price of Bitcoin is $115,553, having increased by nearly 4% in the past 24 hours. Crypto traders should closely monitor these macro factors and adjust their positions based on the latest policy guidance and inflation data.

Conclusion

This week's Fed and its related macroeconomic events have brought significant potential volatility to the crypto market. The strong expectation of interest rate cuts provides a positive liquidity foundation for assets like Bitcoin and Ethereum, but Powell's hawkish or dovish rhetoric, as well as the potential deterioration of employment data, could trigger short-term price fluctuations. Investors should adopt a cautious strategy and treat the macroeconomic calendar as the primary basis for risk management this week.

Disclaimer: This article is for news information only and does not constitute any investment advice. The crypto market is subject to significant fluctuations, and investors should make decisions cautiously.