QCP: Market has priced in a 25 basis point Fed rate hike, with the key focus ahead on policy guidance.

BlockBeats news, September 14 — QCP released its "QCP Market Colour" report on September 14, stating that August CPI data shows U.S. inflation remains above the Federal Reserve's 2% target. The market has now largely priced in expectations for a 25 basis point rate hike by the Fed this week, so the market's focus has shifted from "whether to hike" to how the Fed will characterize this hike and what signals it will send about the future rate path.

U.S. August CPI rose 0.4% month-on-month and 3.4% year-on-year; core CPI rose 0.3% month-on-month, above the market expectation of 0.2%, but the year-on-year growth rate of core CPI fell from 2.5% to 2.4%. QCP said that stronger housing and energy prices brought upward inflation pressure, reinforcing the case for a 25 basis point Fed rate hike, while also meaning that inflation has still not fully returned to target and that the Fed is not facing a policy decision with an already certain answer. Bitcoin's reaction to the CPI data was relatively limited, briefly falling to $76,700 after the data release and then rebounding to around $77,600.

QCP believes this indicates the market has already priced in rate hike expectations to a considerable extent. Ethereum held around $2,500, while institutional funds showed different allocation preferences toward the two assets. Last week, spot Bitcoin ETFs saw net outflows of $462.7 million, but Friday's net outflows slowed markedly to $13.2 million, below Thursday's $282.7 million; meanwhile, spot Ethereum ETFs saw net inflows of $196.9 million, with Friday's single-day net inflows reaching $216.4 million. In the options market, Bitcoin volatility remained relatively moderate before the FOMC meeting, and the volatility curve continued to slope upward, with the 25 Delta risk reversal at about negative 3 volatility points, meaning put option prices remain slightly higher than call options, but not yet at a level indicating a clear rise in market stress.

QCP expects short-term volatility to continue to receive support before the meeting; if the Fed's rate hike magnitude and guidance broadly meet market expectations, a "volatility collapse" may occur after the event. On the technical side, QCP believes BTC's current major resistance is at $80,000 to $82,000, with major support at $75,000 to $76,000; ETH resistance is at $2,500 to $2,550, support at $2,400 to $2,425, and secondary support at $2,300 to $2,350.

Regarding the Fed's policy path, QCP believes that if this rate hike is defined as an "insurance-style" measure to address persistent inflation pressure and is accompanied by relatively restrained forward guidance, while long-term U.S. Treasury yields remain stable or decline, it would be favorable for risk assets including crypto assets. Conversely, if the Fed raises future rate expectations and pushes Treasury yields higher, it could mean further tightening of financial conditions and put pressure on risk assets. The market will focus on the latest economic projections, especially the rate expectations of committee members reflected in the "dot plot."

Meanwhile, AI-related stocks came under pressure as the market discussed the possibility that AI development could slow due to safety concerns. QCP said Bitcoin's relative resilience compared with tech and semiconductor stocks is conducive to highlighting its low correlation with traditional risk assets. However, if the previously crowded trade in tech stocks sees deeper unwinding, it could still transmit to the crypto market through a decline in overall risk appetite and tighter financial liquidity. Another important catalyst within the crypto market itself is the U.S. Congress's CLARITY Act. QCP expects the Senate to hold a procedural vote on the updated CLARITY Act on September 15. If the bill is ultimately passed, it will further clarify the regulatory responsibilities of the SEC and CFTC, potentially reducing regulatory uncertainty and supporting institutional adoption of crypto assets. But QCP also stressed that a procedural vote does not mean the bill will ultimately pass, and subsequent legislative procedures will still determine its short-term market impact.

QCP believes that the controlled BTC price reaction after the CPI release, as well as the notable slowdown in Bitcoin ETF outflows, both indicate that the market has already priced in the Fed's tightening policy scenario to a large extent. What is truly worth watching next is whether the Fed's rate decision, press conference, and economic projections will change the current market baseline expectations. If the policy guidance is dovish, BTC still has a certain risk-reward ratio near the $75,000 to $76,000 support area; but if the Fed signals a more hawkish path of subsequent rate hikes while oil prices continue to rise, risk assets may still face further pressure.

QCP expects three main scenarios for the market this week: the Fed hikes rates by 25 basis points and gives restrained forward guidance, indicating continued confidence that inflation will fall; a rate hike accompanied by signals that further adjustments may still be possible in the future, keeping long-term U.S. Treasury yields elevated; or an unexpected choice to pause rate hikes, or a hawkish signal clearly stronger than expected. Among these, oil price trends will be an additional variable. If there is a major disruption to energy supply, the Fed may maintain a tightening stance even as economic growth comes under pressure, thereby putting greater pressure on risk assets.