Hot Print, Heavy Metal, Bitcoin Holds

As flagged yesterday, US inflation was the volatility event of the week. It did not disappoint.

September CPI came in hotter than expected. Headline inflation rose 0.6% for the month and 3.7% for the year, above the 3.6% forecast and up from 3.4% in August. Petrol did most of the heavy lifting, but core inflation also beat expectations, rising 0.3% for the month against a 0.2% forecast. That second number matters more. It tells the Fed that price pressure is not just sitting at the bowser.

Risk came off across the board. The S&P 500 fell 1.11%. Bitcoin sold off on the release. Gold moved almost in step with it. Silver had a much harder night.

Silver’s Long Way Down

Silver fell 6% overnight and now sits roughly 55% below its January all time high.

That drawdown tells only part of the story. At the peak, some buyers were paying bullion dealer premiums of up to 20% above spot. On top of that, some were encouraged to sell their bitcoin to fund those purchases.

The maths on that is tough. A buyer paying a 20% premium at the high has an entry cost well above the quoted price. With silver now down 55%, that position is closer to 65%+ underwater, and it would need to more than double just to get back to even.

This is not about scoring points. Plenty of people made that decision in good faith, on advice they trusted. But it is a useful reminder that the price of an asset and the cost of owning it are two different things. Premiums, spreads and exit costs all count. So does what you sold to get there.

What It Means for the Fed

The Fed lifted rates in September to a range of 3.75% to 4.00% and meets again on 28 October (the morning of 29 October here in Melbourne).

Before the CPI print, CME FedWatch gave an 80% chance of the Fed holding rates steady. That has now slipped to 67%, with prediction market Kalshi pricing it the same way. A hold is still the base case, but the market now sees roughly a one in three chance of another hike in a couple of weeks.

What It Means for Bitcoin

Higher rates tighten liquidity, and risk assets feel that first. Bitcoin was no exception. It fell alongside equities and gold as the market adjusted to a more hawkish path.

But step back and the picture looks very different. Even after the sell off, Bitcoin is still holding above $80,000 and remains up more than 40% from its low. A pullback on a hot inflation print is normal. Holding that ground while sentiment sours across markets tells us buyers are still stepping in.

For those who have been waiting for lower prices, this is the kind of pullback worth paying attention to. Bitcoin is down around 7% from its recent high and still sits roughly 35% below its all time high. For those who bought higher, dips like this can be an opportunity to lower their average purchase price while the broader uptrend remains intact. In our view, the market is setting up for what could be the next leg of the cycle. If you would like to talk through your position, contact your Stormrake broker today.

The key point is that a hold remains more likely than not. If the Fed sits tight on the 28th, much of this repricing may already be done. If it hikes, expect another round of volatility. Either way, this is a data driven market for the next fortnight, and we will be watching each release closely.

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Stormrake Spotlight: Lighter (LIT) ($3.09)

Source: https://www.tradingview.com/x/qHsaypcr/

Altcoins across the board took a hit from the hot CPI print, and LIT was no exception, falling 7.5%. That move has now confirmed bearish momentum to go with the bearish structure already in place. From here, a retest of the 0.382 Fibonacci level looks likely. That level lines up with both the previous high and the 200 EMA, making it a key area to watch.

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BTC/USD Key Levels and Price Action:

Source: https://www.tradingview.com/x/HnE5AxFX/

Bitcoin has fallen below the $83,000 key support level once again, the third time since last Friday. The bears are adding pressure with help from the CPI numbers, but it is now up to the bulls and the spot demand that has pushed BTC back above $83,000 on each previous dip. If this proves to be a sustained break lower, we can expect a retest of the next key support at $80,600.

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*All prices are denominated in USD unless stated otherwise*

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Written by Alexandar Artis