Market update - October 23rd, 2026

Housing weakness buys the Fed time, inflation takes it back

Bitcoin has remained relatively resilient this week despite another bout of volatility across risk assets. The strongest explanation is renewed spot demand, supported by improving equity sentiment and some short covering. More broadly, markets appear to be moving away from rewarding AI narratives alone and are now demanding a much higher bar for earnings delivery. Disappointing earnings results in the US have therefore produced some sharp moves in equities, and Bitcoin has been caught up in that volatility at times, but on the whole has held up comparatively well.

The US macro picture remains mixed. Housing has weakened sharply, with homebuilder confidence falling three points to 29, its lowest reading since June 2012,¹ housing starts down 5.2% in September to an annualised 1.221M² and pending home sales falling 7.3% month-on-month to 66.0, a record low since the index began in 2001.³ That is increasingly clear evidence that higher borrowing costs are biting into activity.

For rates, a hold at the 28 October Fed meeting remains overwhelmingly the more likely outcome. As of 20 October, Polymarket put the probability of a 25bp hike at around 12%, while CME-based pricing has been closer to 17%, down from above 40% a week earlier.⁴ December is a different story, with markets assigning a probability near 83% to another increase later in the year.⁴ The Fed therefore still has scope to sound firm on inflation even if it pauses in its meeting next week. Housing weakness argues for patience, but last week’s hot CPI and PPI prints mean another hike remains credible.⁵

Bitcoin remains highly sensitive to that distinction. A surprise October hike would likely be more disruptive than a well-signalled December move because it would represent an abrupt tightening of financial conditions relative to current expectations. By contrast, a pause combined with firm guidance would probably be easier for markets to absorb. The recent resilience suggests investors are already becoming more selective about which macro signals genuinely alter the broader liquidity outlook.

Overall, the market remains finely balanced. Spot demand is improving, Bitcoin has absorbed equity volatility reasonably well, and housing weakness gives the Fed some room to wait. But inflation remains the binding constraint, and the next move in crypto is still likely to be dictated more by rate expectations than by any single sector-specific catalyst.

More about a new Bitcoin fork

Elsewhere, eCash (ECX), Paul Sztorc’s proposed Bitcoin hard fork, continues to make tangible technical progress, although adoption remains too early to call a success. It should not be confused with eCash (XEC), an unrelated and older project. The ECX beta opened on 19 September, with mainnet still targeted for around 31 October depending on Bitcoin block timing. The project dashboard currently shows 10 activated sidechains, including seven core projects and three community additions, which is encouraging in terms of participation.⁶ However, activation does not yet equate to meaningful usage. Operational readiness also remains mixed: the same dashboard shows several core sidechain nodes unreachable by its monitoring hub, and developer activity is concentrated among a relatively small number of contributors.⁶

Sources

1. National Association of Home Builders / Wells Fargo, Housing Market Index, 19 Oct 2026

2. US Census Bureau and Department of Housing and Urban Development, New Residential Construction, September 2026, released 20 Oct 2026

3. National Association of Realtors, Pending Home Sales Index, September 2026, released 20 Oct 2026

4. CME Group FedWatch and Polymarket, as of 20 Oct 2026

5. US Bureau of Labor Statistics, Consumer Price Index, September 2026 (+0.6% m/m, 3.7% y/y), released 14 Oct 2026, and Producer Price Index, September 2026 (+1.3% m/m, 6.3% y/y), released 15 Oct 2026

6. eCash (ECX) project dashboard, accessed 22 Oct 2026