Bitcoin was flat this morning as new consumer price index data shows inflation rose 0.4% in August, outpacing the 0.2% rise in July.
At the time of writing, Bitcoin has been flirting with $114,000 as BTC ETF flows hit an 8-week high. The price of BTC has gained 0.3% in the past day, and is virtually unchanged over the past hour since the new BLS data was released.
The Bureau of Labor Statistics noted in its report that inflation over the past 12 months has increased to 2.9%—meaning it’s pulling away from the 2% target the Federal Reserve would like to see.
It doesn’t appear to be enough to have dashed hopes that the Federal Open Markets Committee will issue a rate cut during its meeting next week, but it’s looking more likely now that it’ll be a smaller cut.
Yesterday, after the producers price index came in cooler than expected, 12% of investors were holding out hope that the FOMC would enact a 50 basis point cut in September, according to the CME FedWatch Tool. Today, that segment shrunk to 9% of investors in the hour after the new CPI data was released.
Users on Myriad, a prediction market owned by Decrypt parent company Dastan, were slightly more optimistic. At the time of writing, 84% of users think the FOMC will cut by 25 basis points, 12% of users think it'll be a 50 basis point cut. That leave 2.8% wagering that the Fed will leave rates unchanged and 1.4% who think the Fed will increase rates at its September meeting.
Analysts at QCP Capital, a Singapore-based crypto trading firm, told Decrypt any volatility from the consumer price index print will be short-lived.
“On the macro side, PPI generally leads CPI by 3–6 months. While yesterday’s PPI print could suggest inflation pressures may ease further down the line, the market reaction was muted—we did not see DXY break lower or expectations for 2025–2026 rate cuts increase,” they said.
The DXY, or U.S. Dollar Index, is a financial benchmark that measures the value of the U.S. Dollar against a basket of major foreign currencies, including the Euro, British Pound, and Japanese Yen.
After yesterday’s softer-than-expected PPI print showed the metric fell 0.1% in August, the DXY briefly touched 97.66 before recovering to 97.80. At the time of writing, it has slipped again to 97.69.
“The more decisive event remains September’s FOMC,” the QCP Capital analysts added, “where the discussion on the pace of future rate cuts will likely be the key driver for asset classes.”
While investors wait to see how the governors at the FOMC will vote next week, their counterparts in the EU have decided to hold steady. The European Central Bank announced this morning that it’s holding interest rates steady. But the ECB is looking at different macro data than its U.S. counterparts.
“Inflation is currently at around the 2% medium-term target and the Governing Council’s assessment of the inflation outlook is broadly unchanged,” the council wrote.
Mark Wall, chief European Economist at Deutsche Bank, said he expects the bank to stay the course for a while.
“That could have dovish ramifications for monetary policy,” he said in a note shared with Decrypt. “The ECB describes the inflation outlook as “broadly unchanged” and the statement is quite succinct.”
In the U.S., analysts have been flagging that tariffs and food prices could be a source of continued pressure, analysts at crypto exchange Bitunix said in a note shared with Decrypt.
“Several institutions have recently warned that rising tariff costs and food prices could continue to push inflation higher, while service-sector inflation also shows signs of rebounding,” they said. “If CPI comes in above expectations, markets may reassess the scope for future rate cuts—and even begin to worry about stagflation risks.”
