On Thursday, new inflation and labor data in the usa further supported expectations for the Fed to start cutting interest rates next week, and financial asset prices trended higher.

The U.S. Producer Price Index (PPI) report for August showed a month-on-month increase of 0.2%, slightly higher than economists' expectations, while a year-on-year increase of 1.7%, in line with expectations.

Currently, the market generally expects the Fed to cut interest rates by 25 basis points next week, although some traders still hope for a 50 basis point cut. However, data from the CME Group's FedWatch Tool shows an 85% probability of a 0.25% rate cut.

The three major U.S. stock indices closed higher, with the S&P, Dow Jones, and Nasdaq indices up 0.75%, 0.58%, and 1.00% respectively. Spot gold surged 1.91% during the session, hitting a historical high slightly below $2,560 per ounce.

Due to mixed signals on inflation from the latest U.S. macro data, on Friday the 13th, Bitcoin failed to break through the resistance level after reaching a high in the mid-range of $57,300 and $58,400.

However, Bitcoin has rebounded from its low point below $54,000 on September 7th, and is maintaining a narrow range. The current trading price is $58,009, with a 0.55% decrease over 24 hours. The market is still waiting for a clear trend to emerge after the interest rate cut.

Despite mixed data, expectations for a Fed rate cut have not diminished.

The CPI and PPI inflation data released this week is not far from the forecast. The Fed seems to be on the verge of entering a fairly orderly rate-cutting cycle, which should be very favorable for risky assets.

Data shows that BTC/USD fell below $58,000, but still rose slightly on the same day. The Fed is expected to choose a small rate cut of 0.25% at the meeting to be held on September 18th.

The Fed observation tool data from the Chicago Mercantile Exchange (CME Group) shows that the market expects an 85% chance of a 0.25% rate cut.

Moreover, the European Central Bank (ECB) has already taken the lead in rate cuts compared to the Fed. Currently, the monthly data points are worse than expected, but overall, the PPI is lower than expected, which is bullish for Bitcoin.

Expected volatility, what's next?

From a historical perspective, rate cuts are often accompanied by some initial downward fluctuations, but considering the upcoming election, this volatility should weaken. Unless there are some truly unexpected economic developments, the macroeconomic outlook for the fourth quarter still appears bullish from a fundamental perspective.

In fact, the closer we get to this time, that is, before and after the first rate cut, the less firm the market is about entering a pause in rate hikes and easing, the more volatile the market becomes, which is evident from the recent fluctuations.

Although the trend has shifted from tightening to easing, it's not happening so quickly. The first rate cut doesn't mean there will be a crazy buying frenzy right away. The main theme of a 25 basis point rate cut has been basically confirmed. After its implementation, there will be fluctuations in trading, sometimes declining, sometimes trading.But after the bursting of the internet bubble and the Fed's rate cut in 2001, the ROI dropped by more than 10%.Whether the US inflation will steadily decrease or fluctuate back and forth, are all speculative emotions affecting prices. After all, it's still early for a substantial amount of liquidity to enter bitcoin.

However, apart from the expected rate cut by the Federal Reserve and the impact of the US election, there may not be fundamental factors affecting bitcoin in the near term. Therefore, until new speculative sentiments emerge, the volatility of bitcoin will decrease.

Driven by the release of CPI and the presidential debates, bitcoin volatility decreased by 12% this week. As there are no major overall economic events expected in the short term, the market generally anticipates a decrease in volatility before the FOMC meeting next week, expecting continued narrow range oscillations.

After the rate cut in September is implemented, the next thing to watch is which sentiment will break the narrow range oscillation. Will it be speculation about an economic downturn, Japan's interest rate situation, or maybe neither. We are looking forward to the boost in sentiment from the upcoming US election, as we wait and see.

What are the worthwhile investment opportunities in the current market?

1. Trump launches the cryptos platform World Liberty Financial: Trump announced the launch of his family's cryptos platform World Liberty Financial, positioning it as an alternative to traditional banks. This news may generate widespread market attention, especially attracting new users. The X Space launch event next Monday will be an important milestone for market observation.

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

3. ZKsync launches on-chain governance system: ZKsync has officially launched an on-chain governance system designed based on the principles of power separation 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 feature: Pendle, as a DeFi platform, not only has advantages in ETH but also expands its BTC staking feature, further expanding its user base. For investors who are interested in DeFi staking and yield, Pendle may have more opportunities in the future.

5. Management and scale of Grayscale XRP Trust Fund: The management fee of the Grayscale XRP Trust Fund is 2.5%. Although its scale is relatively small, if the XRP market strengthens, it may generate new attention, especially as the regulatory environment for XRP gradually becomes clearer.