U.S. CPI Comes In Line With Expectations At 3.4%, Bitcoin Rises

The August U.S. CPI inflation report came in line with expectations, sparking a rebound in the Bitcoin price. However, the market still prices in a Fed rate hike next week, with the odds of a hike rising after the inflation report.

Ad

Ad

U.S. CPI Comes In At 3.4%, Bitcoin Rebounds

Bureau of Labor Statistics data shows that the Consumer Price Index rose 3.4% year-over-year (YoY) in August, in line with expectations. Month over month (MoM), the U.S. CPI rose 0.4%, also in line with expectations.

Core CPI came in at 2.4% YoY, in line with expectations and its lowest level since 2021. MoM, Core CPI rose 0.3%, above expectations of 0.2%. The CPI report follows yesterday’s PPI release, which came in at 5.4%, above expectations of 5.3%, and the market crashed on the back of that report.

However, Bitcoin has rebounded on the CPI release despite concerns that inflation is still running well above the Fed’s target of 2%. The leading crypto rose from below the psychological $77,000 level and is now trading above $78,000, according to TradingView data.

Other crypto prices are also up on the back of the inflation report. The Ethereum price is back above the psychological $2,500 level, while Solana has reclaimed the psychological $100 level, according to TradingView data.

Ad

Ad

Odds Of A September Rate Hike Rise Above 80%

The odds of a September rate hike have climbed sharply above 80% despite the in-line CPI print and core CPI at its lowest level in five years. Data from the top crypto prediction market platform Polymarket shows an 81% chance that the Fed will hike rates by 25 bps next week.

A potential Fed rate hike next week will be the first since July 2023, when the Fed hiked rates by 25 bps. The hike would also come as the U.S.-Iran war continues to escalate, with the Iran-backed Houthis taking control of the Bab al-Mandeb Strait, another major oil chokepoint which further threatens to disrupt global oil supply.

The ECB hiked rates yesterday, citing uncertainty around the Middle East crisis and rising inflation. Brent crude is currently trading above $100 as the war escalates, although down over 4% today, according to TradingView data, despite the latest threat of a closure of the Bab al-Mandeb.