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U.S. inflation data gave the market a mixed bag today, with the core monthly reading coming in hotter than economists had penciled in, but with most numbers generally in line with expectations.
Bitcoin initially dipped on the news, but has since bounced back and is once again nearing $79,000, as the broader market digests what it means for the Federal Reserve’s forthcoming decision on interest rates next week.
The Consumer Price Index rose 3.4% year over year and 0.4% month over month, both in line with consensus, according to Bureau of Labor Statistics data released Friday. It’s the same annual rate posted in July.
Core CPI, which strips out food and energy, told a mixed story. The annual core rate cooled to 2.4% from July’s 2.5%, its lowest level since 2021. But the monthly core reading came in at 0.3%, hotter than the 0.2% analysts expected, the detail markets zeroed in on.
The report lands five days before the Fed’s September 15-16 meeting, the last major data point Chair Kevin Warsh’s committee will see before voting. CME FedWatch, which tracks probabilities implied by 30-day Fed funds futures, puts the odds of a 25-basis-point hike at roughly 69%. Prediction markets are a touch more cautious: Polymarket prices the same outcome at 62%, and Myriad, the platform run by Decrypt‘s parent company Dastan, has it at 61%.
Three <a href="https://decrypt.co/374672/bitcoin-ethereum-price-fed-holds-rates-steady” rel=”nofollow noopener” target=”_blank”>regional Fed presidents already dissented in favor of a hike at the July meeting so that it wouldn’t be entirely unexpected, and Warsh used his first Jackson Hole keynote to say the Fed still has “work to do” on inflation.
Crypto, though initially reacting negatively to the data, appears to have generally taken the print in stride. Ethereum led the majors higher, up 7.48% on the day to reclaim $2,611, while Solana climbed 4.53% back above $100.
Zcash was the standout across the top 10, up 23.09% over the past week alongside a 4.71% daily gain, and total crypto market capitalization climbed back toward $2.7 trillion.
Sentiment swung hard with the price action. The Crypto Fear & Greed Index, which had slipped to 56 after Thursday’s hot producer-price report, jumped back to 73, firmly in “greed” territory, while the Altcoin Season Index sits at 38, meaning Bitcoin still dominates the ecosystem as traders don’t have enough appetite for risk just yet.
Spot Bitcoin ETFs are still showing a net outflow of roughly $330.5 million on the day, a reminder that this rally hasn’t yet pulled fresh institutional money off the sidelines.
Derivatives activity climbed alongside the rally. Open interest across crypto futures rose 1.52% to $429.99 billion, with 24-hour trading volume up 2.27% to $877.11 billion. The volatile session triggered $897.09 million in liquidations, split between $493.85 million in long positions and $403.24 million in shorts.
Source: finance.yahoo.com