What to know:
By Francisco Rodrigues (All times ET unless indicated otherwise)
Bitcoin (BTC) is up around 1.4% in the past 24 hours as investors await key inflation data in the U.S., which could shape expectations for a much-discussed interest-rate cut by the Federal Reserve.
Before that hits though, the European Central Bank announces its own interest-rate decision. It's expected to keep rates steady, a surprise move may ruffle a few feathers.
Economists are forecasting a modest rise in the U.S. Consumer Price Index (CPI) due at 8:30 a.m. That, coupled with the near 1 million jobs revision from the Bureau of Labor Statistics earlier this week, points to growing chances of rate cuts.
On Polymarket, bettors now see a 79% chance of a 25 basis-point rate cut this month, while perceived odds of a 50 bps drop have surged to 18% from 5.4% in a week. The CME’s FedWatch tool shows traders positioned for a 92% chance of a 25 bps cut, and an 8% chance of an even deeper one.
A rate cut would benefit risk assets, and the growing odds of such an event are being felt on the market. Spot bitcoin and ether ETFs attracted a combined $928 million in net inflows yesterday and bitcoin hit $114,000 for the first time since early August.
Still, some analysts are flashing caution. Jake Ostrovskis, the head of OTC Trading at Wintermute, pointed out that persistent inflation and slowing growth are raising stagflation concerns.
Since late August, Ostrovskis said, investors have been moving away from ether after its outperformance and back into bitcoin. Options activity reflects that shift, with traders protectively buying puts on ETH and risk reversals for March and June 2026 dipping into negative territory.
This “creates a setup where the market feels well hedged” should pressures ease, Ostrovskis noted. “At the end of the day, we're close to the beginning of a rate-cutting cycle.”
Meanwhile, gold remains near record highs, with the bitcoin-to-gold ratio approaching resistance levels that previously signaled crypto bottoms, analysts at QCP Capital said.
“If history rhymes, bitcoin could be in the process of establishing another bottom, setting the stage for the next major leg higher,“ they wrote.
Still, geopolitical turmoil shouldn’t be ignored. Russia violated Poland’s airspace this week, forcing NATO to scramble its jets and prompting Polish Prime Minister Donald Tusk to say this was “the closest we have been to open conflict since World War II.”
Tusk underlined there’s “no reason to believe we’re on the brink of war,” and Moscow denied responsibility for the attack. Stay alert!
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