HTX Chief Analyst Cloud: Crypto market leverage has been largely cleared; limited room for further short-term deep declines

TechFlow news, November 11: U.S. October CPI came in above expectations. After the data release, BTC briefly fell to around $73,000, and markets began pricing in a 50 basis point rate hike in December. In response, HTX Chief Analyst Cloud believes the probability of a 50 basis point hike is low; 25 basis points remains the base case, and the current decline is closer to price correction. There are three reasons:

The Fed values the continuity of data; historically, there have been very few cases in which a single-month CPI jump changed the pace of rate hikes. A single month of upside surprises is not enough to overturn the gradual path;

This round of inflation stickiness mainly stems from the lagged pass-through of tariffs and housing rents, which will naturally fade; marginal employment indicators are also weakening, and the Committee has no reason to layer aggressive tightening on top of the peak pass-through;

Credit spreads have widened from 93 basis points to 348 basis points, financial conditions have effectively tightened, and an additional 50 basis point hike would amount to actively creating financial stability risks.

In the crypto market, funding rates have turned negative, perpetual contract open interest has fallen by nearly 20% over the past week, and the Fear & Greed Index has dropped into the extreme fear zone. Leverage has been largely cleared, and the room for further short-term deep declines is limited. However, being oversold does not mean an immediate rebound; confirmation of CPI easing over the next two months is needed. If inflation exceeds expectations for two consecutive months and a 50 basis point hike materializes, a trend-driven decline would begin. At present, the probability of this scenario appears low.

Note: The content of this article is not investment advice and does not constitute an offer, solicitation of an offer, or recommendation of any investment product.

Source: TechFlow