10.25 AI Daily Report The Crypto Assets market is experiencing increased volatility, and the uncertainty of the Fed's policy is on the rise.

1. Headlines

1. The “disappearance” of the Federal Reserve's inflation data triggers a crisis of trust in the market.

On October 25, the US CPI data for September was below expectations. Subsequently, the White House issued a rare warning that if the government shutdown continues, the inflation report for October may not be released on schedule, marking the first time in US history that there is a “CPI absence.” The White House stated that funding interruptions have prevented Bureau of Labor Statistics surveyors from conducting fieldwork, causing data collection to come to a standstill.

This message raises significant doubts in the market about the predictability of the Federal Reserve's subsequent policies. U.S. Treasury yields have risen sharply, the dollar index has become more volatile, while the stock market and the Bitcoin market have entered a wait-and-see pattern. If inflation indicators cannot be updated, the Federal Reserve's December decision will be in a data vacuum, relying only on employment and consumption as alternative indicators, which will increase the risk of policy misjudgment.

Analyst's View: The “inflation data vacuum” will become a new variable in market pricing. If CPI truly struggles to be released, the Federal Reserve will be forced to maintain policy consistency with more subjective judgments, which may reshape the flow of funds and test the market's trust boundaries regarding policy transparency.

2. Trump claims that cryptocurrency may solve the $35 trillion debt problem in the United States.

According to reports, Trump stated in a private meeting that cryptocurrency has a “bright future” and hinted that the U.S. might be able to solve the $35 trillion national debt problem with cryptocurrency. According to leaked video footage, Trump said: “I would write on a small piece of paper: $35 trillion in cryptocurrency, we have no debt, that's what I like to do.”

Trump's remarks have sparked heated discussions. Supporters believe that cryptocurrencies do have the potential to become a new financial tool to address the debt crisis. However, critics worry that over-reliance on cryptocurrencies could introduce new financial risks and question whether Trump truly understands the operational mechanisms of cryptocurrencies.

Regardless, Trump's statements have once again put cryptocurrency in the spotlight. Analysts point out that as a former president, Trump's attitude towards cryptocurrency will have a certain impact on the regulatory landscape. The future application prospects of cryptocurrency in addressing sovereign debt and other areas are worth continuous attention.

3. Dogecoin aims for explosive rise to $3

Analysts believe that Dogecoin is on a path towards explosive growth, with $3 being the next potential target price. Recent price movements of Dogecoin have shown strong upward momentum, rising over 20% in the last 24 hours.

The main reasons driving this increase include: viral marketing campaigns on social media, optimistic remarks from well-known investors, and positive news such as the exchange listing Dogecoin derivatives. Meanwhile, the Dogecoin community is actively expanding, attracting a large number of new investors.

However, some analysts are cautious about the long-term prospects of Dogecoin. They point out that Dogecoin lacks practical application scenarios and mainly relies on speculation to maintain price increases, thus facing significant speculative risks. However, in the short term, the popularity of Dogecoin seems likely to continue, and the $3 price level is expected to become a reality.

4. The blockchain company group achieves profitability, stock prices soar.

According to reports, the blockchain company group achieved profitability for the first time in 2024, with stock prices soaring over 20%. The group's new management team has redefined its strategic positioning, seized opportunities from traditional financial institutions entering the market, leveraged compliance advantages to accelerate corporate business cooperation, and simultaneously engaged in global acquisition expansion to drive revenue growth.

Analysts believe that the group's profitability signifies that the blockchain industry is entering a mature phase. As regulations become increasingly clear, more traditional financial institutions are beginning to invest in the cryptocurrency asset sector, providing ample development space for compliant institutions.

However, there are also views that blockchain companies still face many challenges in achieving sustainable profitability, including technological innovation, talent shortages, and financial pressures. Whether the group can continue to maintain a good development trend in the future will require further observation of its business expansion situation.

5. The cost of AI humanoid robots could drop to as low as $10 per hour.

According to futurist Dr. Perro Michik, the labor market will undergo significant changes due to the rise of humanoid robots. By 2035, the cost of using AI humanoid robots may be as low as $10 per hour, far below the cost of labor.

Mickey proposed a “robotics as a service” model that enables businesses to flexibly hire robots, significantly reducing labor cost expenditures. He believes this change could completely alter the landscape of the entire industry.

However, the rise of AI humanoid robots may also bring the risk of job losses. Analysts suggest that governments and businesses should proactively implement countermeasures, such as imposing a “robot tax” or promoting “universal basic income,” to mitigate the impact of AI on the job market.

In any case, the development trend of AI humanoid robots has become a foregone conclusion. Relevant enterprises and practitioners need to adjust their strategies in a timely manner, seize the new opportunities brought by AI, and also be vigilant about the potential new risks.

2. Industry News

1. Bitcoin price fluctuates between $109,000 and $112,000, as the market enters a period of dual pressure testing.

Bitcoin has fluctuated between $109,000 and $112,000 in the past 48 hours, with $112,000 acting as a concentrated pressure point for short-term liquidation, while $108,000 forms preliminary support. Under the dual influence of inflation data vacuum and technical pressures, the market has entered a stress test period.

Unix Analyst's View: If inflation indicators cannot be updated, the Federal Reserve's decision in December will fall into a data vacuum, relying only on employment and consumption as alternative indicators, which will increase the risk of policy misjudgment. If the CPI is indeed difficult to produce, the Federal Reserve will be forced to maintain policy consistency through more subjective judgments, which may reshape the flow of funds and test the market's trust boundary in policy transparency.

From a technical perspective, Bitcoin is facing a resistance level of $112,000 in the short term. If it falls below this level, it may trigger further selling pressure. However, analysts believe that the contract open interest for both Bitcoin and Ethereum is at historically low levels, and both are showing signs of turning positive based on technical indicators. Therefore, there is still hope for a rally before the end of the year.

2. Ethereum chain activities are continuing to heat up, providing a solid basis for market fluctuations at the end of the year.

Tom Lee stated in an interview with CNBC that the cryptocurrency market has just undergone the largest-scale liquidation and deleveraging event in history, but Bitcoin's final decline was only maintained in the range of 3%-4%, which fully demonstrates that Bitcoin is becoming a highly resilient store of value.

“Imagine if a similar shock occurred in the gold market: even in the event of a massive liquidity crisis, if gold only dropped by a few percentage points, the market would see it as a definitive proof of value anchoring. The current performance of Bitcoin is just like this.” Lee stated, “Due to the push from stablecoins, Ethereum Layer 1 and Layer 2 networks are experiencing significant growth in activity, but this fundamental improvement has not yet been fully reflected in the coin prices. In my observation, the continued warming of on-chain fundamental activities actually provides a solid basis for a significant market change before the end of the year.”

3. The cryptocurrency fear index has risen to 37, and the market's panic sentiment has temporarily eased.

According to Alternative data, the cryptocurrency fear and greed index has risen to 37 today (up from 30 yesterday), with a weekly average of 23, indicating a certain degree of alleviation in market “fear” sentiment.

Note: The panic index threshold is 0-100, including indicators such as volatility, market trading volume, social media heat, market surveys, the proportion of Bitcoin in the entire market, and Google Trends analysis, etc. This index reflects the overall market sentiment, with lower values indicating greater panic.

Analysts say that although the index has rebounded somewhat, it is still in the “panic” zone. The improvement in market sentiment is mainly due to favorable factors such as low positions in Bitcoin and Ethereum contracts and ongoing chain activity. However, if the vacuum of inflation data and technical pressure continue, the market may fall back into a state of panic.

4. The funding rates of mainstream exchanges tend to be neutral, and market sentiment is returning to rationality.

According to data from Coinglass, the current mainstream funding rates show that after a recent rebound in the market, several asset trading pairs have further returned to a neutral funding rate. Overall, the sentiment still leans bearish, but some trading pairs on certain trading platforms have begun to show positive funding rates.

The funding rate is a fee set by the trading platform to maintain a balance between the contract price and the underlying asset price, typically applicable to perpetual contracts. It is a mechanism for capital exchange between long and short traders, used to adjust the cost or income of traders holding contracts, in order to keep the contract price close to the underlying asset price.

Analysts say that the return of the funding rate to a neutral range reflects a trend towards rational market sentiment. After experiencing recent volatility, investors' expectations for the cryptocurrency market are gradually becoming more objective, and trading behavior is becoming more cautious. However, it is still necessary to be vigilant about the risk of liquidation in extreme market conditions.

5. The “diamond hands” holding of Bitcoin has decreased, and the price faces greater resistance to rise.

Glassnode posted on social media that the non-liquid Bitcoin supply has started to decrease, with approximately 62,000 BTC moved out of long-term dormant wallets since mid-October. When the non-liquid supply decreases, more tokens will enter the circulating market, and if there is a lack of strong new demand, the upward price trend will face greater resistance.

In this cycle, non-liquid supply was an important driving force, but the recent reversal has broken this trend. Historically, similar supply rebound phenomena often weaken market momentum. A larger outflow of 400,000 BTC occurred in January 2024; although the current changes are relatively mild, the trend is worth paying attention to.

Interestingly, whale wallets have continued to increase their holdings during this period. Over the past 30 days, the holdings of whales have steadily grown, and there have been no large-scale sell-offs since October 15. The largest continued outflows mainly come from wallets holding 0.1 to 10 BTC (equivalent to assets ranging from $10,000 to $1 million). This group has consistently maintained a net selling position since November 2024.

Analysts point out that momentum traders have largely exited the market, while bottom-fishing funds have not formed enough demand to absorb the selling pressure. As first-time buyers remain on the sidelines, this supply-demand imbalance will continue to suppress prices until stronger spot demand emerges.

In summary, the price of Bitcoin is facing certain pressures at the current stage, but the long-term outlook remains positive. Investors need to stay patient and rational, closely monitoring changes in fundamentals and capital flows.

3. Project News

1. Tether plans to launch the US-compliant stablecoin USAT in December.

Tether plans to launch a compliant stablecoin, USAT, for the U.S. market in December. The token is issued by Tether in partnership with the regulated U.S. crypto bank Anchorage Digital's joint venture, Tether America, and aims to meet the regulatory requirements of the GENIUS Act. Tether CEO Paolo Ardoino stated that the company is expanding USAT's user base through investments, targeting 100 million U.S. users.

As the world's largest stablecoin issuer, Tether has been actively embracing regulation. The launch of USAT is an important move for Tether in the U.S. market, expected to further enhance its compliance and influence in the United States. The introduction of USAT will also provide U.S. users with a compliant and highly liquid crypto asset, meeting their demand for stablecoins.

Analysts believe that the launch of USAT will accelerate Tether's development in the U.S. market and help increase its market share globally. At the same time, USAT will also become an important competitive force for Tether against other stablecoin issuers in the U.S. market.

2. The Sui ecosystem project Cetus received a $100 million investment from Mysten Labs.

The decentralized exchange Cetus in the Sui ecosystem has announced that it has raised $100 million in funding led by Mysten Labs. Cetus is the first DeFi project launched on the Sui network, aiming to provide high-performance and low-fee decentralized trading services for the Sui ecosystem.

Cetus relies on the Move virtual machine and parallel execution engine of the Su network, achieving a high throughput of tens of thousands of transactions per second. At the same time, Cetus will also integrate the new consensus mechanisms Narwhal and Tusk from the Su network to further enhance transaction confirmation speed and security.

The Su network was founded by former Meta employees and is considered a strong competitor in the next generation of high-performance blockchains. Cetus, as the first DeFi project launched in the Sui ecosystem, will directly impact the ecological construction process of the Su network. Analysts believe that Cetus's financing will provide it with ample financial support, helping it gain a first-mover advantage in the Sui ecosystem.

3. The first lending protocol in the Aptos ecosystem, Sonar, has raised $50 million in financing.

The first lending protocol of the Aptos ecosystem, Sonar, announced the completion of a $50 million financing round. This round was led by FTX Ventures and Jump Crypto. Sonar aims to provide efficient and secure lending services for the Aptos ecosystem.

As the first lending protocol launched in the Aptos ecosystem, Sonar will support users in using various tokens within the Aptos ecosystem for collateralized lending. Sonar will adopt an innovative risk model and liquidation mechanism to ensure the security of lending activities.

Aptos is a new high-performance blockchain network founded by former Meta employees and is seen as a strong competitor to the next generation of Ethereum. The launch of Sonar will bring important DeFi infrastructure to the Aptos ecosystem, helping to attract more funds and applications into the ecosystem.

Analysts believe that Sonar's financing scale reflects investors' optimism towards the Aptos ecosystem. As the first lending protocol, Sonar will occupy an important position in the Aptos ecosystem, and its development will directly impact the progress of DeFi construction within the Aptos ecosystem.

4. Arrum launches Nitro upgrade, trading throughput increased by 7 times.

The Ethereum Layer 2 scaling solution Arrum has announced the launch of the Nitro upgrade. This upgrade will increase Arrum's transaction throughput by approximately 7 times, reaching a level of 7,000 transactions per second.

The core of the Nitro upgrade is the adoption of a new “Efficient Accumulated Value Tree” data structure, significantly enhancing Arrum's transaction processing efficiency. At the same time, Nitro also optimizes the execution engine of Arrum's virtual machine, further reducing transaction fees.

As one of the leading Layer 2 scaling solutions in the Ethereum ecosystem, Arrum has always faced issues of transaction congestion and high fees. The launch of the Nitro upgrade will effectively alleviate this contradiction, bringing a better user experience to the Arrum ecosystem.

Analysts believe that the Nitro upgrade will further enhance Arrum's competitiveness in the Ethereum ecosystem. With a significant increase in transaction throughput, Arrum is expected to attract more DeFi applications and users, thereby promoting the development of the entire Ethereum ecosystem.

5. Chainlink releases new economic model for LINK token

Chainlink has released a new economic model for the LINK token. The new model will introduce a burning and reserve mechanism for the LINK token to ensure a long-term supply contraction of LINK.

According to the new model, Chainlink will quarterly burn a portion of the LINK tokens earned from transaction fees and deposit the remaining portion into the reserve fund. This mechanism aims to control the inflation level of LINK tokens and provide long-term price support.

As a leading blockchain oracle service provider, Chainlink's LINK token plays a key role. The new economic model will further enhance the value support of the LINK token, helping to attract more node operators and users to join the Chainlink network.

Analysts believe that the new economic model of the LINK token will bring better price performance. At the same time, this move also reflects Chainlink's emphasis on the token economic model, which helps enhance its competitiveness in the oracle market.

4. Economic Dynamics

1. Federal Reserve reform stress testing, public confidentiality model and economic scenario design

Economic Background: The U.S. economy is in a recovery phase, but inflation rates remain high, and the unemployment rate stays low. The latest data shows that the annualized quarterly GDP for the U.S. in the third quarter is 2.6%, higher than expected. The inflation rate reached 8.2% in September, slightly down from 8.3% in August, but still far above the Federal Reserve's target level of 2%. The job market remains robust, with the unemployment rate at 3.5% in September, close to the lowest level in 50 years.

Important event: The Federal Reserve announced a comprehensive reform of the annual “stress tests” for large banks on Friday. According to a proposal that will be voted on by the Federal Reserve Board that day, banks will receive more information about how stress tests operate, including the disclosure of previously confidential models and soliciting feedback, as well as the process for publishing the design of hypothetical economic recession scenarios each year, which serve as the basis for the stress tests. This reform will bring much-needed transparency to the stress tests.

Market Reaction: This reform aims to improve the transparency and credibility of stress tests, which helps to enhance market confidence in the banking sector. However, some analysts are concerned that excessive transparency may affect the effectiveness of stress tests, as banks might adjust their reported data to pass the tests. Overall, the market has mixed reactions to this reform, and investors are assessing its potential impact on the banking industry.

Expert Opinion: Federal Reserve Vice Chair Bowman stated that this reform will bring much-needed transparency to stress testing. However, Fed Governor Barr strongly opposed it, saying that revealing too many details of the tests would make them “weaker and less credible.” He warned that banks would be able to fine-tune their balance sheet data to pass the tests with minimal capital requirements, which were originally meant to shield against potential losses.

2. The “shutdown” of the U.S. government continues to have an impact, and next month's inflation data may be difficult to produce.

Economic Background: The US economy is facing the dual pressures of high inflation and economic slowdown. In September, the Consumer Price Index (CPI) rose by 8.2% year-on-year, slightly lower than August's 8.3%, but still well above the Federal Reserve's target level of 2%. The job market remains strong, but signs of weakness have emerged in the manufacturing and real estate sectors.

Important event: Due to the significant differences between the Republican and Democratic parties in the United States on core issues such as healthcare-related benefits expenditures, the Senate was unable to pass a new temporary funding bill before the end of the last fiscal year on September 30, resulting in the federal government running out of funds to operate normally and “shutting down” starting October 1.

Market reaction: The government's “shutdown” will affect the normal operations of multiple federal agencies, including the Bureau of Labor Statistics, and may result in the inflation data for October not being released as scheduled, which would be the first occurrence of this situation in U.S. history. Investors are concerned that the absence of inflation data will create greater uncertainty for the Federal Reserve when adjusting interest rates and assessing price trends, thereby exacerbating market volatility.

Expert analysis: Goldman Sachs analysts stated that if the October inflation data cannot be released, the Federal Reserve will have to rely on alternative indicators such as employment and consumption to assess inflationary pressures, which will increase the risk of policy misjudgment. Bank of America Merrill Lynch analysts believe that the absence of inflation data may intensify market skepticism regarding the transparency of Federal Reserve policies, leading to greater volatility.

5. Regulations & Policies

1. Federal Reserve reform stress tests, public confidentiality models, and economic scenario design processes.

The Federal Reserve announced on Friday a comprehensive reform of the annual “stress tests” for large banks. According to the proposal that the Federal Reserve Board will vote on that day, banks will receive more information about how the stress tests operate, including the disclosure of previously confidential models and seeking feedback, as well as the process for publishing the hypothetical economic downturn scenarios designed each year, which form the basis of the stress tests.

Stress testing is an important component of the Federal Reserve's regulatory tools, aimed at assessing banks' capital adequacy in extreme situations such as economic recessions. However, for a long time, banks have expressed dissatisfaction with the lack of transparency in stress testing, believing that they cannot fully understand the testing methodologies. This reform will enhance the transparency of stress testing, helping banks better assess their own capital strength.

However, Federal Reserve Governor Barr strongly opposed the reform, stating that revealing too many details about the tests would make them “weaker and less credible.” Barr warned that banks would be able to precisely adjust their balance sheet data to pass the tests with minimal capital requirements, while this capital was originally intended to cover potential losses.

The Federal Reserve Board is expected to advance this proposal and finalize it next year after soliciting public opinion. Industry insiders believe that the reform is beneficial for enhancing the credibility of stress tests, but it may also pose risks of manipulating test results. Regulatory agencies need to seek a balance between transparency and rigor.

2. The U.S. government's “shutdown” impact continues, and next month's inflation data may “have a gap”.

Due to the significant differences between the Republican and Democratic parties in the United States on core issues such as healthcare-related welfare spending, the Senate was unable to pass a new temporary funding bill before the end of the previous fiscal year on September 30, resulting in the federal government running out of funds to maintain normal operations and “shutting down” from October 1.

As a result, the White House stated that the Bureau of Labor Statistics will be unable to complete next month's inflation report due to investigators being unable to go out to collect data. This will be the first time in over seventy years that the United States has been unable to release inflation data.

Inflation data is crucial for the Federal Reserve in formulating monetary policy. Analysis indicates that the absence of inflation data will subject the Federal Reserve to greater uncertainty when adjusting interest rates and assessing price trends. This may intensify market skepticism regarding the Federal Reserve's policies, impacting the dollar's movement and asset prices.

Goldman Sachs analysts have stated that if the October inflation data cannot be released, the Federal Reserve will fall into a “data vacuum” in December, relying only on alternative indicators such as employment and consumption, which will increase the risk of policy misjudgment. The bond and foreign exchange markets have already shown volatility, reflecting concerns about the transparency of policies.

Experts believe that the government's “shutdown” is having an increasingly negative impact on the economy. If the two parties cannot reach an agreement on temporary funding, the government shutdown could last for several weeks, further exacerbating market turmoil.

3. Trump appointed Michael Selig as the chairman of the CFTC to address the growth of the cryptocurrency industry.

The Trump administration appointed Michael Selig as the chairman of the Commodity Futures Trading Commission (CFTC) to address the rapid growth of the cryptocurrency industry.

The CFTC is the main agency in the United States regulating cryptocurrency derivatives trading. As the cryptocurrency market continues to expand, its regulatory responsibilities are becoming increasingly important. However, the CFTC has been facing challenges of insufficient funding and manpower, making it difficult to enforce effectively.

Selig is an experienced financial regulator who has worked at the New York Stock Exchange and Nasdaq. He will succeed the current CFTC acting chairman, Rostin Behnam. The Senate is expected to vote on Selig's appointment soon.

Industry insiders believe that under Selig's leadership, the CFTC will strengthen its regulatory oversight of the cryptocurrency derivatives market. He may push for an expansion of the CFTC's regulatory scope and enhance collaboration with other agencies to combat fraud.

However, some analysts are concerned that excessive regulation may hinder innovation in the cryptocurrency market. They urge the CFTC to protect investors while also allowing room for the development of emerging technologies.

Overall, Selig's appointment reflects the increasing importance the U.S. government places on cryptocurrency regulation. In the coming years, the CFTC may play a more significant role in formulating regulatory rules for cryptocurrency derivatives.

4. Deutsche Bank expects the Federal Reserve to announce the end of quantitative tightening next week.

Deutsche Bank strategists wrote in a report on Friday that they expect the Federal Reserve to announce a halt to its balance sheet reduction at next week's policy meeting, rather than at the December meeting, in order to avoid a “serious blow” to its policy credibility after repurchase rates unexpectedly remained high this week.

Quantitative tightening is a policy tool used by the Federal Reserve to reduce the size of its balance sheet, aimed at “withdrawing” liquidity from the financial system to control inflation. Since June 2022, the Federal Reserve has been gradually reducing its holdings of Treasury securities and mortgage-backed securities.

Deutsche Bank believes that if the Federal Reserve announces the end of quantitative tightening as planned at the December meeting, it would contradict the surge in repo rates this week, undermining the coherence of its policy. Therefore, the Federal Reserve may make this decision in advance at next week's meeting.

However, some analysts have expressed skepticism about this. Goldman Sachs analysts pointed out that the Federal Reserve has always placed a high value on the transparency and predictability of its policies, and an early end to quantitative tightening could raise questions in the market about its decision-making process.

In any case, the end of the quantitative tightening policy will mark the nearing conclusion of the Federal Reserve's tightening cycle. Market participants will closely monitor the specific measures from the Federal Reserve's meeting next week to assess their impact on the interest rate path.

Overall, Deutsche Bank's expectations reflect the market's high attention to Federal Reserve policies. Any slight policy change could trigger significant market reactions.