Huobi HTX chief analyst Cloud said Bitcoin (BTC) and other crypto markets have less leveraged exposure left to unwind, while October inflation keeps the Federal Reserve’s December rate decision in focus.
The Bureau of Labor Statistics (BLS) said the consumer price index rose a seasonally adjusted 0.4% in October from September. The index excluding food and energy increased 0.3%, also seasonally adjusted, marking a third consecutive monthly gain.
Cloud said funding rates had turned negative and open interest in perpetual futures contracts had contracted nearly 20% over the week. He viewed those figures as signs that traders had reduced leveraged positions, leaving less room for another sharp drop. He cautioned that the recent decline itself did not signal an immediate rebound.
Cloud sees a 25-basis-point rate increase in December as the baseline and considers a 50-basis-point move unlikely.
Before October’s inflation figures were released, Federal Reserve Governor Christopher J. Waller said that if core CPI resembled its two previous readings, at about 0.3% or higher, a larger move might be needed and officials should consider a 50-basis-point increase. Waller said this was his view, not a decision by the full committee.
Cloud said the Fed looks for persistent patterns in economic data, so one above-forecast inflation month is unlikely by itself to change the rate path. He expects tariff- and rent-related price pressures to fade and cited labor-market weakness and credit spreads widening from 93 to 348 basis points as signs of tighter financial conditions. He warned that another 50-basis-point increase could create financial-stability risks.
Cloud said he would want CPI to fall over the next two months before treating a recovery as confirmed. The Fed calendar lists its December meeting for Dec. 8-9, and the BLS has scheduled the November CPI release for Dec. 10.
