Huobi HTX Chief Analyst Cloud: Leverage in the Crypto Market Cleared Sufficiently, Limited Short-term Downside Space

The U.S. October CPI exceeded expectations, with BTC briefly dropping to around $73,000, as the market bets on a 50 basis point rate hike in December. Huobi HTX Chief Analyst Cloud believes that the probability of a 50 basis point hike is low, and a 25 basis point increase remains the baseline scenario, with the current decline approaching a pricing correction. Cloud presents three reasons: the Federal Reserve values data continuity, and there are very few cases where a single month's CPI jump alters the rate hike rhythm; the current inflation stickiness mainly stems from the lagged transmission of tariffs and rents, which will naturally diminish in the future; the credit spread has widened from 93 basis points to 348 basis points, tightening financial conditions, and an additional 50 basis points would increase financial stability risks. In the crypto market, the funding rate has turned negative, and the open interest in perpetual contracts has decreased by nearly 20% in a week. The fear and greed index has fallen into the deep fear zone, indicating that leverage has been sufficiently cleared, with limited short-term downside space. However, an overshoot does not mean an immediate rebound; confirmation is needed from the CPI drop over the next two months. If inflation exceeds expectations for two consecutive months and a 50 basis point hike occurs, a trend decline will begin, but currently, this scenario seems unlikely.

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