QCP said in its Sept. 14 QCP Market Colour report that markets have largely priced in expectations for a 25-basis-point Federal Reserve rate hike this week, leaving the next key question centered on how the central bank describes the move and what it signals for the future path of rates.
August CPI kept inflation above the Fed’s target
According to the report, U.S. headline CPI for August rose 0.4% month on month and 3.4% year on year. Core CPI increased 0.3% on the month, above the 0.2% market expectation, while the annual core CPI rate slowed from 2.5% to 2.4%.
QCP said strength in housing and energy prices added upward pressure to inflation and reinforced the case for a 25-basis-point increase. At the same time, inflation has not fully returned to the Fed’s 2% target, meaning the policy decision is not one with a settled answer.
Bitcoin showed a limited response to CPI, while Ether held near $2,500
QCP said Bitcoin’s reaction to the inflation print was relatively contained. After the data release, BTC briefly fell to $76,700 before rebounding toward $77,600. In QCP’s view, that price action suggests the market has already incorporated a large part of the expected hike.
Ether, by contrast, stayed near $2,500. The report said institutional flows continue to show different allocation preferences between Bitcoin and Ether.
Spot ETF flows diverged between BTC and ETH
Spot Bitcoin ETFs recorded net outflows of $462.7 million last week, though those outflows slowed sharply by Friday to $13.2 million, down from $282.7 million on Thursday.
At the same time, spot Ether ETFs posted net inflows of $196.9 million for the week, including $216.4 million in net inflows on Friday alone.
Options traders are still focused on the FOMC event
In options markets, QCP said Bitcoin volatility remained relatively calm ahead of the FOMC meeting. The volatility curve continued to slope upward, and the 25-delta risk reversal sat around negative 3 volatility points. That indicates put options still carried a slight premium over calls, but not at a level that would suggest sharply rising market stress.
QCP expects short-dated volatility to stay supported into the meeting. If the size of the rate move and the accompanying guidance come in broadly in line with expectations, the firm said a post-event volatility crush could follow.
QCP outlined key BTC and ETH levels
On the technical side, QCP said Bitcoin faces primary resistance at $80,000 to $82,000, with main support at $75,000 to $76,000.
For Ether, QCP placed resistance at $2,500 to $2,550, support at $2,400 to $2,425, and secondary support at $2,300 to $2,350.
Policy guidance now matters more than the hike itself
QCP said that if this hike is framed as an “insurance-style” step in response to persistent inflation pressure, while follow-up guidance stays restrained and long-dated Treasury yields remain stable or move lower, that would be supportive for risk assets, including crypto.
If the Fed instead lifts its expectations for future rates and pushes long-term Treasury yields higher, the report said that would point to tighter financial conditions and add pressure to risk assets. Markets will be watching the latest economic projections closely, especially the dot plot and what it shows about policymakers’ rate expectations.
Tech and AI stocks remain part of the macro backdrop
QCP also noted that AI-related stocks have come under pressure as the market debates whether AI development could slow because of safety concerns.
Against that backdrop, the firm said Bitcoin’s relative resilience compared with tech and semiconductor stocks helps highlight its lower correlation with traditional risk assets. Still, if crowded positioning in tech unwinds more deeply, that could spill into crypto through weaker risk appetite and tighter financial liquidity.
The CLARITY Act is another catalyst this week
Beyond the Fed meeting, QCP pointed to the U.S. Congress’s CLARITY Act as another important catalyst for crypto markets.
QCP expects the Senate to hold a procedural vote on the updated CLARITY Act on Sept. 15. If the bill is ultimately passed, it would further clarify regulatory responsibilities between the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission, reduce regulatory uncertainty, and support institutional adoption of crypto assets.
QCP also stressed that a procedural vote does not mean the bill has been passed, and that the remaining legislative process will determine its near-term market impact.
QCP laid out three main scenarios for the week
QCP said Bitcoin’s controlled reaction after the CPI release, together with the sharp slowdown in spot Bitcoin ETF outflows, shows that the market has already priced in much of the Fed tightening scenario. The bigger issue now is whether the rate decision, press conference, and economic projections alter the market’s current baseline view.
If guidance comes across as mild, QCP said BTC near the $75,000 to $76,000 support zone still offers some risk-reward appeal. If the Fed delivers a more hawkish signal on future hikes while oil prices continue to rise, risk assets could come under added pressure.
The firm sees three main market scenarios this week:
- The Fed raises rates by 25 basis points and delivers restrained forward guidance, signaling continued confidence that inflation is easing.
- The Fed hikes and also signals that further adjustments may still be needed, keeping long-term Treasury yields elevated.
- The Fed unexpectedly pauses, or delivers a hawkish signal that is materially stronger than expected.
QCP added that oil prices remain an extra variable. If energy supply faces a major disruption, the Fed could maintain a tightening stance even as economic growth comes under pressure, creating more strain for risk assets.