Cryptocurrencies started the week cautiously due to the postponement of official macro data and intense news flow due to the government shutdown in the USA, which has entered the 13th day. While critical indicators, especially the October CPI data, were postponed to October 24, visibility decreased before the Fed’s October 28-29 meeting. While Wall Street volatility increased in the period when bank balance sheets were to come, the recently announced tariff tariffs weakened the risk appetite. Markets are waiting for the messages from Fed Chairman Jerome Powell and the speeches of FOMC officials.
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The ongoing government shutdown has disrupted the calendar of flagship indicators such as nonfarm payrolls and CPI. Investors are weighing measurements from the Beige Book and private data providers rather than delayed official numbers. The Fed plans to include the CPI, which is expected to be published on October 24, in its decision set, albeit with a delay. While this picture maintains the emphasis on data dependency in monetary policy, it makes short-term price discovery more volatile.
Throughout the week, markets are monitoring the guidance from key figures, especially the Fed, and the first act of the balance sheet season. Results from big banks can serve as a litmus test for risk appetite. The volatility threshold is decreasing amid valuation discussions in technology stocks. On the foreign exchange and bond front, the brake on the data flow caused by the closure makes pricing more fragile.
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Tariff rhetoric triggered deep selling last weekend cryptocurrencyIt strengthened the short-term correlation between currencies and risky assets. After the sharp withdrawals, reaction purchases came into effect rapidly. However, the delay in official data, fragile order books and increasing news flow make one-way positioning risky. What analysts underline is that surprises from the Fed’s communication and bank balance sheets may create secondary waves in cryptocurrency prices.
Signals from Powell and FOMC members may reignite the looser/hawkish debate for a longer period of time. While an inflation data below expectations supports the possibilities of a year-end discount, data above expectations may increase the pressure on prices and trigger a sales wave in risk assets again. In this range, intra-blockchain flows and derivatives market data will serve as a complementary compass for short-term direction.
