Bitcoin traded flat near $114,000 after the U.S. Consumer Price Index (CPI) showed a 0.4% monthly increase in August and a 2.9% rise year‑over‑year, moving away from the Federal Reserve’s 2% target. BTC has gained about 0.3% over the past 24 hours and remained roughly unchanged in the hour after the Bureau of Labor Statistics released the report.
ETF inflows into bitcoin products are at an eight‑week high, a notable demand signal that helped cushion price moves despite the hotter inflation print. Still, the inflation surprise nudged market expectations around the size of an expected Fed rate cut at next week’s Federal Open Market Committee (FOMC) meeting.
According to the CME FedWatch Tool, the odds of a 50 basis point cut in September slipped from about 12% to 9% immediately after the CPI release. Prediction‑market users on Myriad were more convinced of a smaller move: roughly 84% of participants expected a 25 basis point cut, while about 12% anticipated a 50 bp cut.
Market participants and crypto desks note that any price reaction to the CPI print is likely to be short‑lived. Singapore‑based QCP Capital pointed out that the Producer Price Index (PPI) tends to lead CPI by 3–6 months, and yesterday’s softer PPI reading did not trigger a decisive drop in the U.S. Dollar Index (DXY) or materially change longer‑term rate‑cut expectations.
At the same time, macro risks remain. Analysts flagged rising tariffs, food costs and a rebound in service‑sector inflation as possible upside drivers for prices, which could force markets to reassess the timing and size of future rate cuts — a scenario that would increase volatility and create downside risk for risk assets including crypto.
What traders should watch: incoming FOMC commentary and the actual vote next week, DXY moves, and ongoing ETF flow data. Those factors will likely determine whether bitcoin’s price holds its current range or breaks into a larger swing.
Risk note: This article is informational and not financial advice. Crypto markets can move rapidly on macro data and policy shifts; manage position sizes and risk accordingly.
Source: Decrypt. Read the original coverage for full details.