CoinShares: Bitcoin shows resilience, but U.S. inflationary pressures still cap upside for the market.

CoinShares released a report noting that Bitcoin has held up relatively well this week amid renewed volatility in risk asset markets, driven mainly by a rebound in spot buying, improved stock market sentiment, and some short covering. Overall, the market is gradually cooling its enthusiasm for AI-themed narratives, shifting focus to whether corporate earnings can meet expectations. Underperforming earnings from some U.S. companies triggered sharp stock price swings, which also impacted Bitcoin to a degree, though the cryptocurrency still demonstrated strong overall resilience. Meanwhile, U.S. macroeconomic signals remain mixed, with the housing market continuing to weaken. On the interest rate front, markets widely expect the Federal Reserve to hold rates steady at its October 28 policy meeting. Expectations of another Fed rate hike in December remain elevated, with the probability standing near 83%. The soft housing market has given the Fed some leeway to pause rate increases, but last week’s higher-than-expected Consumer Price Index (CPI) and Producer Price Index (PPI) data mean inflation remains a key factor constraining a policy shift. An unexpected Fed rate hike next week could trigger more significant financial market volatility by exceeding market expectations; in contrast, holding rates steady and maintaining a hawkish signal is easier for the market to absorb. Overall, the current market is still a mix of bullish and bearish factors. Improved spot demand, Bitcoin’s increased ability to weather stock market volatility, and a cooling housing market have provided some support; however, lingering inflationary pressures limit the Fed’s room to ease policy. Bitcoin’s future trajectory is expected to remain highly dependent on interest rate expectations and overall liquidity conditions, with single-sector or market catalysts playing a relatively limited role.