Bitcoin is holding steady above $111,000, showing a 0.5% gain over the last 24 hours as the market consolidates. The recent stability is backed by growing optimism in the broader financial markets, fueled by new economic data that strongly suggests an imminent interest rate cut from the Federal Reserve.

Inflation Cools, Boosting Market Sentiment

According to a report from the US Labor Department, inflation cooled more than anticipated in September. The Consumer Price Index (CPI) showed a 3.0% year-over-year increase, just below the 3.1% that economists had forecasted. Core CPI, which strips out volatile food and energy costs, also registered a 3.0% rise, similarly undercutting expectations of 3.1%.

This softer-than-expected inflation data has significantly impacted market expectations for monetary policy. Based on the CME FedWatch tool, traders are now pricing in a 98-99% probability that the Federal Reserve will cut interest rates at its upcoming meeting on October 29. The combination of easing inflation and signs of a slowing labor market has bolstered confidence that the central bank will move to stimulate the economy.

The positive sentiment was reflected in traditional markets, with the S&P 500 gaining nearly 1% to reach record highs. This risk-on appetite has spilled over into digital assets, providing a supportive backdrop for Bitcoin and other cryptocurrencies.

Key Technical Levels to Watch

From a technical standpoint, Bitcoin has successfully defended its support zone around $110,000 on multiple occasions, suggesting underlying strength. For the upward trend to continue, analysts note that Bitcoin needs to decisively break through the resistance area between $112,000 and $114,000. A failure to overcome this level could risk a sharp correction.

Key indicators present a mixed but generally positive picture. The Relative Strength Index (RSI) is at 60, indicating neutral momentum without being overbought. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator remains in a bullish position, with the MACD line trading above its signal line. If Bitcoin can clear its immediate resistance, the path toward the $120,000 target could open up. On the downside, primary support is located between $108,000 and $110,000, with a stronger floor at $105,000.

Altcoins and ETF Flows Show Mixed Signals

The broader crypto market has joined the rally, with major altcoins including Ethereum, XRP, Solana, and Cardano posting gains of over 3%. However, investment flows present a more complex picture. While Bitcoin exchange-traded funds (ETFs) collectively saw net outflows of $90.60 million over three consecutive days, spot Bitcoin ETFs continued to attract substantial net inflows of $149.96 million, signaling persistent demand for direct exposure to the asset.

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