Macro data released this week showed early signs of a potential stagflation mix — slowing jobs growth alongside a pickup in prices — yet crypto markets moved higher as traders priced in expected Federal Reserve rate cuts. Market participants say the dominant driver for this cycle remains monetary policy, not short-term growth scares.
Key data: U.S. consumer prices rose 0.4% month-on-month in August, pushing annualized inflation to 2.9% (the highest since January). At the same time, initial jobless claims climbed to a four-year high and the Bureau of Labor Statistics issued a large downward jobs revision. Despite that, the S&P 500 hit fresh records and the dollar index slid about 0.5% to 97.50.
Bitcoin briefly topped $116,000 and was trading around $115,244 as traders leaned into a narrative of easing rates and continued liquidity. Market voices argue that bitcoin and other crypto assets are increasingly being viewed as a hedge against fiat dilution and long-term fiscal risk rather than a pure risk-on trade.
What analysts are watching
Experts expect the Fed to cut rates by 25 basis points to roughly 4% on Sept. 17, with additional reductions priced through year-end. That outlook underpins current market optimism but also creates conditional risk: if inflation re-accelerates and forces tighter monetary policy, growth- and liquidity-sensitive assets could suffer a meaningful pullback.
Shane Molidor of Forgd framed the cycle as a monetary tailwind that attracts capital into scarce, non-sovereign assets. Auros’s Le Shi highlighted how the Mag 7 tech names — buoyed by AI investment cycles — have decoupled from classic stagflation concerns, indirectly supporting crypto sentiment. Markus Thielen of 10x Research expects disinflation to resume, which would give risk assets room to climb.
On token selection, traders named SOL, HYPE, ENA (and Ethena’s USDe), CRO and larger-cap names like BNB and DOGE among those to watch during the next upswing, citing rotation into high‑beta and yield‑sensitive products.
Risk note: Momentum here depends on the Fed’s path. A surprise tightening to combat stickier inflation would likely trigger volatility and short-term drawdowns across crypto and equities; conversely, confirmed easing would reinforce the bullish case.
Source: CoinDesk. Read the original coverage for full details.