Market Commentary

THE FED MINUTES REAFFIRM THE RESTRICTIVE BIAS

The data that set the week's tone were the minutes of the Fed's September 15–16 meeting, released October 7. The document confirmed two things: that September's 25-basis-point hike (to the 3.75%–4.00% range) was by unanimous vote, and that 16 of the 18 members who submitted projections expect at least one more hike this year. Several framed it explicitly as risk management — an "insurance policy" against the scenario of inflation staying stuck above target or of further supply shocks arriving. In other words, the restrictive bias the market had begun to discount after last week's weak jobs figure remains firmly in place.

The reaction in expectations was immediate. The odds of a hike at the October 28 meeting stay low, around 17–20%, but the odds of a hike by December (the Fed next decides December 9) rose again to ~84%. The read we have been holding is confirmed: the Fed did not abandon the tightening, it postponed it. For Digital Assets, the message is the same as recent weeks — as long as rates stay high, they set a ceiling on the price of an asset that pays no coupon.

The minutes also addressed the jump in Treasury yields to highs since 2002. Members attributed it not only to expectations of higher Fed rates but also to heavy spending on artificial intelligence, solid economic growth, and uncertainty around the Treasury's debt-buyback program. Added to this was a signal from the consumer side: a New York Fed survey showed twelve-month inflation fears at their highest since May 2023. Together, it reinforces the same conclusion: inflation risk has not disappeared.

OIL CLIMBS AGAIN

The second blow came from energy. Brent crude rose close to 5% Thursday, to roughly USD 105 a barrel, after Iran intensified its attacks on vessels in the Strait of Hormuz — nine ships reportedly targeted in a week — and a storm in the Gulf of Mexico led U.S. operators to shut in production preemptively. On Friday, crude pared the gain and fell back toward USD 103 a barrel after President Trump said the U.S. was holding "productive discussions" with Iran and would not attack the country before the November 3 midterm elections. It is a comment that caps the immediate military risk — and with it, the oil spike — but does not resolve the conflict: even with Friday's pullback, Brent is on track to end the week higher.

The implication is the same chain we have been describing: straits, oil, inflation, Fed. Crude back at highs reactivates inflationary pressure through energy, just as the Fed makes clear its bias remains restrictive. It is the combination that most constrains risk appetite.

THE OCTOBER 14 CPI AND THE FOOD RISK

The data focus of the coming week is the September CPI, released October 14. It is the key inflation reference before the Fed's October 28 meeting, and it will mark whether the market holds or adjusts the odds of a December hike: an upside surprise would reinforce them; a downside one would temper them.

In the background, the climate risk we flagged persists: the odds of a very strong El Niño this winter remain high, with the potential to pressure food prices. It is an additional, slower-developing inflationary front worth keeping in view.

Bitcoin (BTC): Trades at USD 82,800 (-2.0% versus the prior Friday's close). The week had a wide path: BTC started Monday near USD 87,000 — grazing the USD 86,600 resistance — as hike expectations briefly cooled, then fell with the risk-off to a low near USD 80,600 Thursday, testing the floor of its support zone. What matters is that it recovered quickly: despite the brief dip below USD 80,800, BTC closed the week back within the USD 80,800–83,300 zone it has been treating as a structural reference since the breakout two weeks ago. And its relative resilience was notable: it ended with a decline of close to 2%, versus more than 7% for ETH and SOL. BTC dominance rose to near 60%, a one-month high: the week's decline was a rotation out of risk within Digital Assets rather than a deterioration specific to BTC. Support at USD 80,800–83,300 and, below, USD 78,000; resistance at USD 86,600.

Ethereum (ETH): Trades at USD 2,480 (-7.1%), the largest decline of the three and the one most hit by its own factors; it touched a low near USD 2,410 Thursday. Its ETFs strung together six days of outflows, compounded by a structural headline: BitMine — chaired by Tom Lee and one of the largest corporate holders of ETH — announced it will stop accumulating once it reaches 5% of the circulating supply. Since that corporate demand was one of the pillars of the bullish ETH thesis, the announcement removes a relevant marginal buyer. The asset lost the USD 2,600 support we had flagged. Support at USD 2,400–2,480; resistance at USD 2,650–2,780.

Solana (SOL): Trades at USD 110.00 (-6.8%), a sharp decline in line with ETH’s, giving back much of the prior weeks' advance. Its ETF flow turned negative and price ceded the USD 113 level we had flagged as support, with a low near USD 106 Thursday. The correction is pronounced but consistent with the general risk pullback; the asset stabilized near USD 110, a level to watch to gauge whether the underlying trend stays intact. Support at USD 105–108; resistance at USD 118–122.

The week's decline had a forced-deleveraging component. In the first phase of the retreat, some USD 550MM in long positions were liquidated (bullish bets that close automatically when price falls below certain levels), a flush that accelerated the move down. It was not an extreme-scale collapse, but a reminder that part of the recent advance rested on leverage that has now been cleaned out.

The relative behavior of the assets is the week's most useful read. That BTC fell much less than ETH and SOL, and that its dominance rose, indicates the market did not flee Digital Assets wholesale but rotated from the higher-"beta" assets (more sensitive to the cycle) toward the one of higher relative quality. It is the typical behavior of an orderly risk-off phase, not a panic: when appetite returns, it tends to be BTC that leads.

On the positioning front, the picture is consistent with a market reducing exposure: selling pressure came more from the spot channel — the ETF outflows — than from a chaotic unwind of leverage. It is a correction healthy in its mechanics, if uncomfortable in price.

Expected volatility for the week ahead: high. The October 14 CPI, the evolution of the Hormuz conflict, and positioning on the way to the October 28 Fed keep multiple fronts open. In a market without a clear buying catalyst, any of them can move price forcefully.

BTC: -USD 700.00MM, the worst weekly print in months and the central data point of the shift in tone. After a mixed start (-89.8 Monday, +118.8 Tuesday), outflows surged Wednesday (-484.9) and Thursday (-244.1), with BlackRock's IBIT — which had been buying — turning to heavy selling. The pattern is clear: the institutional demand that validated the breakout not only stopped but reversed, in the face of the Fed's returning restrictive bias and the oil escalation. Confirming whether these outflows ease is, today, the most important signal on the floor's solidity.

ETH: -USD 486.10MM, its sixth straight day of outflows and the heaviest relative pressure of the three assets. The withdrawals were broad, led by BlackRock's ETHA. The combination of sustained outflows and the BitMine announcement hit the allocation thesis in ETH's favor that had reappeared two weeks ago; for now, that thesis is on pause.

SOL: -USD 21.20MM, a moderate outflow that cuts a three-week run of inflows. The pullback is smaller in magnitude than BTC's and ETH's, but enough to confirm the demand retreat was broad-based. Worth watching whether institutional interest in SOL stabilizes once the risk-off wave passes.