US October Interest Rate Freeze Probability 63%...Is Bitcoin (BTC) Inflow Beginning?

▲ Bitcoin (BTC), Federal Reserve (Fed), US Dollar (USD), Interest Rate / AI-generated image

As the U.S. Personal Consumption Expenditures (PCE) price index slowed, the likelihood of the Federal Reserve (Fed) further raising interest rates in October sharply diminished. Amid vulnerabilities within the traditional stock market and compounding macro uncertainties, expectations for a capital rotation into the virtual asset market are rising.

On October 1st (local time), the cryptocurrency-specialized YouTube channel Paul Barron Network uploaded a video analyzing that the Fed's rationale for further tightening has weakened as the August PCE inflation rate eased to 3.4%, below the initial forecast of 3.7%. It was assessed that the core PCE figure could be lowered by up to about 20 basis points solely due to the effects of changes in calculation methods, such as for portfolio management and investment advisory fees, computer software, and legal services, providing the Fed with policy flexibility. In the virtual prediction market Polymarket, the probability of a 25bp interest rate hike in October, which was as high as 69% just a few days ago, plummeted to 37% after the indicator's release, while the probability of a freeze surged to 63%.

Along with expectations for monetary policy easing, the U.S. Treasury Department's large-scale liquidity provision policy is also cited as a factor stimulating buying in the virtual asset market. The U.S. Treasury plans to resume a $6 billion buyback (liquidity provision through Treasury bond purchases) targeting long-term government bonds the following day. Given that Bitcoin (BTC) staged a rebound to the $83,800 level during the large-scale Treasury bond purchases in August, it is observed that the phenomenon of capital flowing into Bitcoin could be replicated during a period of liquidity expansion.

Competition in infrastructure between traditional finance and virtual asset platforms is also intensifying. Robinhood Markets Inc. (HOOD) made a full announcement at its summit event, including 24/7 stock trading (even on weekends), automated investment agents, and 4x intraday margins, directly targeting existing trading platforms like Coinbase Global Inc. (COIN). The speed of asset movement within the decentralized ecosystem is also accelerating, with Circle's Wrapped Bitcoin market capitalization surpassing $300 million and decentralized finance (DeFi) deposits reaching $252 million.

Market vigilance is also growing regarding the close ties between the political sphere and the artificial intelligence (AI) industry. Former U.S. President Donald Trump met with top executives from major tech companies, including Jensen Huang of NVIDIA Corporation (NVDA), Google, Meta, OpenAI, xAI, and Anthropic, to encourage AI infrastructure expansion. Conversely, in the U.S. Congress, the necessity of creating regulatory legislation to control the pace of technological development, which is outstripping safeguards, is being raised.

The deteriorating internal health of traditional stock markets is identified as a potential fuse for the risk asset market. Excluding large AI big tech stocks from the S&P 500 components, 58% of all stocks are trading below their 200-day moving average, indicating the worst market depth since May 2025. Experts analyze that if the capital expenditure (CAPEX) growth of AI companies slows down or regulatory oversight strengthens depending on the results of the November midterm elections, adjustment funds from the stock market could largely shift to the virtual asset market.

[Article Key Summary]

-With August PCE slowing to 3.4%, the Fed's probability of an October interest rate freeze surged to 63%.

-Infrastructure positive developments, such as the U.S. Treasury's $6 billion Treasury bond buyback and Robinhood (HOOD)'s introduction of 24-hour trading, coincided.

-As 58% of S&P 500 stocks fell below their 200-day moving average, the possibility of a capital rotation from the stock market to Bitcoin (BTC) increased.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*