Inflation to set up Bitcoin melt-up as rates to fall to 2.75% by next October
US inflation data supports expectations for a Fed rate cut next week, potentially leading to lower rates and a Bitcoin 'melt-up'.Summary
Despite US inflation ticking up to 3.0% year-over-year in September, futures markets heavily price in a 25 basis point Federal Reserve rate cut at the upcoming October FOMC meeting, moving the target rate toward 3.50%-3.75% from the current 3.75%-4.00%. Looking ahead to October 2026, the market-implied path centers around a 3% Federal Funds rate, with the highest probabilities clustered between 2.75% and 3.25%. This expected easing, coupled with falling real yields and persistent ETF inflows, is seen as setting the stage for a Bitcoin 'melt-up.' The article outlines three scenarios for 2026: a base case of slow disinflation leading to rates near 2.75%-3.25% (constructively bullish for Bitcoin), a sticky inflation path leading to higher rates (range-bound for BTC), or a growth scare path leading to aggressive easing (a two-step recovery for risk assets). The transmission of these macro impulses to Bitcoin price remains heavily dependent on real yields and the flow channel provided by crypto ETP demand.
(Source：CryptoSlate)