Crypto markets remain rattled from a $500 billion wipeout.But analysts see bullish signs.This is what they\u2019re looking out for.<\/p>\n
Crypto traders are still reeling from the chaos that wiped 11%, or roughly $500 billion, off the market\u2019s total value in October.<\/p>\n
But there are reasons to be optimistic. <\/p>\n
\u201cThe macro setup is shifting fast,\u201d wrote<\/a> David Brickell and Chris Mills, the analysts behind the London Crypto Club\u2019s weekly Connecting the Dots newsletter, on Sunday. \u201cLiquidity indicators are tightening, and the Fed looks close to ending its quantitative tightening programme.\u201d<\/p>\n This setup will \u201ctrigger a short-term correction before setting up the next parabolic leg higher into 2026,\u201d they added. <\/p>\n Their comments come after one of the most volatile stretches ever for crypto markets. On October 10, US President Donald Trump\u2019s threat to slam Chinese imports with a 100% tariff triggered<\/a> the liquidation of $19 billion in leveraged positions.<\/p>\n While there are some signs of recovery, crypto is mainly trading sideways with Bitcoin down over 10% from all-time highs. <\/p>\n Here\u2019s what to watch this week:<\/p>\n Trade war <\/p>\n Trade war fears linger in crypto markets, Brickell and Mills wrote. <\/p>\n That\u2019s despite Trump offering a more conciliatory tone towards Beijing. On Friday, the US president said that the 100% duty was \u201cnot sustainable\u201d in an interview<\/a> with Fox News. <\/p>\n Trump now plans to meet Chinese President Xi Jinping in South Korea in two weeks to defuse tensions between Washington and Beijing. <\/p>\n \u201cThis is all just the \u2018art of the deal and the\u2018TACO\u2019 [Trump Always Chickens Out] trade remains alive and well,\u201d the London Crypto Club analysts wrote.<\/p>\n Federal Reserve<\/p>\n The Federal Reserve is expected to cut interest rates in October. The CME FedWatch tool shows<\/a> a 99% chance of a 0.25% cut in interest rates. Lower interest rates tend to bolster risk-on assets like crypto. <\/p>\n Dovish comments from the central bank\u2019s officials have reinforced those expectations, Brickell and Mills said, hinting that the Fed may be nearing the end of its quantitative tightening cycle.<\/p>\n That means more money will be injected into the financial system. That\u2019s typically good news for risk-on assets like crypto.<\/p>\n Coinbase expects<\/a> the Fed to deliver two more rate cuts this quarter, unlocking part of the $7 trillion parked in US money market funds and potentially reigniting demand for risk assets.<\/p>\n Fed Chair Jerome Powell has said<\/a> that reserves are \u201cnearing the lower end of ample levels,\u201d hinting the central bank may act this month. <\/p>\n Small bank stress<\/p>\n To be sure, there are also reasons to be concerned. <\/p>\n Some regional US banks are showing renewed signs of strain<\/a>, Brickell and Mills said. Zions Bancorp took a $50 million loss on bad loans, and Western Alliance disclosed a borrower default, reviving fears of credit stress.<\/p>\n The Fed\u2019s Beige Book showed consumer spending inching down and employers cutting headcount, signalling US economic weakness. <\/p>\n