On Thursday, new US inflation and labor data further supported expectations that the Federal Reserve will start cutting interest rates next week, and financial asset prices are trending higher.

The US Producer Price Index (PPI) report for August showed that wholesale prices rose 0.2% month-on-month, slightly higher than economists' expectations, while rising 1.7% year over year, in line with expectations.

Currently, the market generally expects the Federal Reserve to cut interest rates by 25 basis points next week, but some traders still hope to cut interest rates by 50 basis points, but the Chicago Mercantile Exchange Group (CME Group) US Federal Reserve Watch Tool data shows that the possibility of cutting interest rates by 0.25% is 85%.

The three major US stock indexes closed higher, with the S&P, Dow Jones, and Nasdaq up 0.75%, 0.58%, and 1.00%, respectively. Spot gold surged 1.91% intraday to a record high of just under $2,560 an ounce.

Since the latest US macro data gave mixed signals about inflation, on Friday (13th), Bitcoin fluctuated between intraday lows of $57,300 and around $58,400 and failed to break through the resistance level after rising.

However, Bitcoin has recovered from a low of less than $54,000 on September 7 and has remained fluctuating in a narrow range. Currently trading at $58,009, down 0.55 percent in 24 hours. The market is still waiting for interest rate cuts to be implemented to break out of the trend.

Despite mixed data, expectations of the Fed's interest rate cut have not subsided

The CPI and PPI inflation data released this week are not much different from the forecast. The Federal Reserve seems to be about to enter a fairly orderly cycle of interest rate cuts, which should be very beneficial to risk assets.

The data showed that BTC/USD fell below $58,000 and still rose slightly on the day. The Federal Reserve will still choose to cut interest rates slightly by 0.25% at its upcoming meeting on September 18.

According to the Chicago Mercantile Exchange Group (CME Group) US Federal Reserve Watch Tool data, the market expects an 85% chance of cutting interest rates by 0.25%.

Moreover, the European Central Bank (ECB) is already ahead of the Federal Reserve in cutting interest rates. Currently, monthly data points are worse than expected, but overall, PPI falls short of expectations, and Bitcoin will benefit.

Expected fluctuations, what next?

From a historical perspective, interest rate cuts are often accompanied by some initial downward fluctuations, but considering the upcoming elections, this fluctuation should abate. Unless there are some truly unexpected economic developments, the macro outlook for the fourth quarter is still bullish in terms of fundamentals.

In fact, the more we get to this point, that is, before and after the first rate cut, it's not as firm as after the suspension of interest rate hikes and the release of water, the more erratic the market becomes. Looking at recent fluctuations, it is quite obvious.

Although the trend is shifting from austerity to easing, it's not that fast, and cutting interest rates for the first time doesn't mean there will be liquidity in the market right away. The main task of cutting interest rates by 25 has basically been confirmed. After implementation, trading will continue to decline for a while, and then trade for a whilesoft landingAfter a while, whether US inflation will continue steadily or repeatedly, etc., these are all emotional hype, affecting prices. After all, it's still too early for a real large amount of liquidity to enter BTC.

However, apart from expectations of the Federal Reserve's interest rate cut and the impact of the US election, there may be no fundamental factors affecting Bitcoin in the near future, so Bitcoin's volatility will decline until new hype is first seen.

Bitcoin's volatility fell 12% this week, fueled by the CPI release and presidential debate. Since there are no major overall economic events in the short term, the market generally expects volatility to decline before next week's FOMC meeting, and it is expected that it will still fluctuate in a narrow range.

After the interest rate cut comes to fruition in September, we'll see how that sentiment will break this narrow range of shocks. Whether it's speculating on recession expectations, or Japan's interest rate hike, there's no problem with both. Welcome the emotional boost brought about by the US election that we mentioned earlier. We'll wait and see.

What are some worthwhile layout opportunities in the current market?

1. Trump launches crypto platform World Liberty Financial: Trump announced the launch of his family's cryptocurrency platform World Liberty Financial, positioned as an alternative to traditional banks. This news is likely to attract widespread attention in the market, and is particularly appealing to new users. Next Monday's X Space launch event will be an important point in market observation.

2. Increased practical uses of stablecoins: New research from Visa and Castle Island Ventures shows that in addition to cryptocurrency transactions, stablecoins are increasingly being used for practical purposes. This trend may drive the further application of stablecoins in the fields of payments, cross-border transactions, etc., and it is worth paying attention to the development of related projects.

3. zkSync launches on-chain governance system: zkSync officially launched an on-chain governance system designed based on the principles of separation of powers and checks and balances. This system may enhance the decentralized management of the zkSync ecosystem, attract more developers and users to participate, and lay a solid foundation for its future expansion.

4. Pendle expands BTC staking functionality: As a DeFi platform, Pendle not only has an advantage over ETH, but has now also expanded its BTC staking function, which has further expanded its user base. For investors concerned about DeFi staking and yield, Pendle may have more opportunities in the future.

5. Management and size of the Grayscale XRP Trust Fund: The Grayscale XRP Trust Fund has a management fee of 2.5%. Although it is small, if the XRP market strengthens, it may attract new attention, especially as the regulatory environment for Ripple gradually becomes clear.