In brief
- August CPI rose 3.4% year over year and 0.4% month over month, both matching consensus, per Bureau of Labor Statistics data released Friday.
- Core inflation cooled to 2.4% annually, its lowest since 2021, but its 0.3% monthly reading ran hotter than the 0.2% economists forecast.
- Crypto rallied across the board: total market capitalization climbed back near $2.7 trillion, the Fear & Greed Index jumped to 73 (greed) and Bitcoin's daily chart now shows a nascent golden cross.
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 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.
Bitcoin price: What the charts say
Bitcoin opened Friday at $76,529 and briefly dipped toward the day's $76,040 low in the minutes after the CPI print, an initial hawkish reaction before the market reversed hard.
Bulls have since taken over, for now, and BTC climbed as high as $79,837 through the session and now trades near $79,007, a 3.24% gain on the day nearing the psychologically significant $80K mark.
The chart's biggest structural shift is the exponential moving average, or EMA. Bitcoin's 50-day exponential moving average has now crossed above its 200-day, a golden cross, a setup traders read as confirmation that the medium-term trend has flipped bullish rather than a warning of a coming reversal, which is what the opposite death cross would signal.
It just happened, which means it is not technically confirmed yet. There isn’t yet a significant gap between both averages, so traders would be wise to keep their champagne in the refrigerator for a couple of days.
The Relative Strength Index, or RSI, sits at 59.7—bullish territory and well below the 70 reading that would flag the move as overbought. The Average Directional Index, which measures how strong a trend is regardless of direction, reads in the 40s, comfortably above the 25 threshold that separates a real trend from noise, with the DI+ line above DI- confirming buyers are still in control.
The key zone to watch sits below current prices: a Fibonacci leg drawn off the summer's $68,858 low to the $82,281 high hit in late August puts Bitcoin's golden zone, the retracement band bulls need to defend, between $73,986 and $75,569.
Above that the $82,281 high from late August remains the level that needs to break for the rally to extend before the Fed's rate decision on Wednesday at 2pm ET.
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.