Bitcoin Surges; Global Markets Await Positive News from China on Saturday

Following the September Producer Price Index (PPI) report showing a modest increase of 0.1%, Bitcoin (BTC) bulls eyed the $62,000 support level in early Friday morning trading, aligning with economists' expectations. This helped soothe the nerves of anxious traders who feared that another high point following yesterday's higher-than-expected Consumer Price Index (CPI) could further reduce the likelihood of a rate cut in November.

Analysts at Secure Digital Markets noted: "Thursday's inflation data exceeded expectations, reigniting investors' concerns about persistent inflationary pressures. September's CPI exceeded expectations, triggering a broad sell-off in risk assets." "BTC initially fell after the release, then dropped another 2% in the afternoon, reaching a low of $58,900."

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They added: "The difference in ETH open interest contracts, with a ratio of 2.5:1 for selling call options, indicates that traders are cautious about ETH's short-term potential." "However, BTC is transitioning from the typically bearish months of August and September to the traditionally bullish month of October."

"Speaking of cryptocurrency ETFs, the market witnessed a difference of $81.1 million in outflows for Bitcoin ETFs, while Ethereum-based ETFs attracted $10.1 million in inflows," the analysts emphasized. "The total net outflow for ETH ETFs since their establishment in July has been $556 million. A significant drawback of ETH ETFs is the lack of staking opportunities, depriving investors of potential earnings of about 4%."

As for the macroeconomic conditions that helped boost the market to end the working week, analysts highlighted reports that "the People's Bank of China (PBoC) may be preparing to introduce additional economic stimulus measures, a move that could boost global market sentiment."

Analysts at Ryze Labs noted: "On Tuesday, Chinese stocks stagnated during a lackluster briefing that failed to provide specific economic stimulus measures." "The market is now eagerly awaiting Saturday's fiscal briefing for more detailed guidance. We believe this is a key event that could boost or temper global liquidity prospects in the coming weeks."

The main source of volatility in the US market is interest rate expectations, as the latest mixed economic data complicates the Federal Reserve's issues.

Ryze Labs analysts stated: "Last Friday's non-farm employment report surprisingly increased by 254,000, the largest increase in six months, bringing the unemployment rate down to 4.1%." "This sparked optimism as the S&P 500 continues to hit historical highs."

They pointed out: "However, Thursday's Consumer Price Index (CPI) report was higher than expected, with a year-on-year increase of 2.4%, highlighting the persistence of inflationary pressures." "As a result, expectations for a significant rate cut have been tempered. The market has now fully priced in the possibility of a 50 basis point rate cut at the upcoming November Federal Open Market Committee meeting, with the current possibility of a 25 basis point cut at [84%]."They added: "Furthermore, on Tuesday, the U.S. Supreme Court rejected the appeal regarding the ownership of 69,370 Bitcoins seized from the Silk Road marketplace." "This ruling paves the way for the U.S. government to auction off BTC worth approximately $4.4 billion, which could lead to significant supply pressure in the short term."

Matthew Graham, Managing Partner at Ryze Labs, stated: "The early days of Bitcoin were dominated by endogenous factors." "Now that Bitcoin has given rise to the entire cryptocurrency industry, its correlation with macro factors is increasing. Bitcoin Maximalists are known for sitting in armchairs like Austrian economists, and perhaps in retrospect, it is inevitable that we would become an industry of self-taught macroeconomists!"

The impact of these macro factors on Bitcoin's price has been evident in recent weeks, as volatility has surged, yet the trading range for King Crypto has remained largely unchanged.

Alex Thorn, Head of Galaxy Digital Firmwide Research, noted: "On Thursday, Bitcoin began to drop from $64,000 to $58,000." "It is currently unclear whether the decline was caused by the U.S. government's sale, although a significant amount of selling was observed on Coinbase, with BTC trading at a $200 discount compared to other exchanges."

He added: "Regardless of whether this week's decline was caused by the U.S. government's sale, 'Individual X's Silk Road BTC represents the last large block of coins seized by the U.S. that could potentially be sold on the open market." "Given that Bitfinex was a victim of a hack, and the U.S. government has indicated that stolen property will be returned rather than sold, this does not come as a surprise to us."

On the favorable side of the equation, Thorn emphasized that "the approval of FTX's plan is another positive step in resolving one of the dirtiest incidents in cryptocurrency. Of course, many creditors are disappointed that their claims are being dollarized, given the significant appreciation of native crypto assets since FTX's bankruptcy filing. Nevertheless, creditors will receive more than 100% of the cash value of their claims, which is a clear positive outcome. Claims were once sold at as low as $0.10 in the secondary market."

Currently, Bitcoin is trading at $62,128, up 2.67% on the 24-hour chart.

It is worth noting that the daily candle is almost identical to last Friday's 1-day candle, highlighting the fact that despite the surge in volatility, BTC has largely been running on a treadmill.