Daily News 19

Tag: US inflation

  • Bitcoin Recovers From CPI Dip as US Inflation Holds at 3.4%

    Bitcoin Recovers From CPI Dip as US Inflation Holds at 3.4%

    US Inflation Data Triggers Brief Bitcoin Dip Before Recovery Above $77,000

    Bitcoin experienced a sharp but short-lived decline toward $76,000 following the release of the latest US Consumer Price Index (CPI) report, which showed underlying price pressures running slightly hotter than economists anticipated. The cryptocurrency quickly reversed course, reclaiming the $77,000 level, while Ethereum and several major altcoins maintained gains throughout the trading session.

    Core CPI Exceeds Forecasts, Keeping Federal Reserve Policy in Focus

    The US Bureau of Labor Statistics reported that the Consumer Price Index rose 0.4% in August, accelerating from July’s 0.1% increase and matching consensus estimates. On a year-over-year basis, headline inflation held steady at 3.4%, remaining well above the Federal Reserve’s 2% target.

    The core inflation measure, which strips out volatile food and energy components, increased 0.3% month-over-month — above the 0.2% increase most economists had projected. However, the annual core inflation rate edged down from 2.5% to 2.4%.

    Gasoline prices accounted for over one-third of the monthly headline increase, surging 3.9% and lifting the broader energy index 2.1%. Shelter costs rose 0.3%, while food prices edged up 0.1%.

    Bitcoin Volatility Reflects Trader Uncertainty on Rate Outlook

    Bitcoin initially slid to approximately $76,050 immediately after the data release before recovering to trade above $77,100. The token’s intraday range spanned $76,400 to $79,550, highlighting the divided sentiment among market participants interpreting the inflation implications for US interest rates.

    The stronger-than-expected core reading could reinforce a more hawkish stance from the Federal Reserve at its September 15-16 policy meeting. Elevated interest rates typically reduce the appeal of riskier assets as investors find alternative yield opportunities in safer instruments.

    Ethereum Outperforms as Broader Crypto Market Shows Resilience

    Ethereum led the major cryptocurrencies during the session, trading near $2,543 — a gain of nearly 3.2% after reaching intraday highs of $2,648. Solana advanced approximately 1.5% to around $101, while BNB climbed 1.4% to roughly $723. Dogecoin added a modest 0.5%, and XRP was little changed near $1.35.

    Notably, gains across the altcoin complex began before the CPI release, meaning they cannot be attributed to the inflation data. However, the market’s refusal to follow Bitcoin’s initial slide lower suggests the sell pressure was isolated rather than systemic.

    Key Takeaways

    • US headline inflation held at 3.4% year-over-year; monthly core CPI (0.3%) exceeded the 0.2% forecast.
    • Bitcoin briefly dipped toward $76,000 before recovering above $77,000, with an unusually wide $3,000+ intraday range.
    • Ethereum and major altcoins held gains, indicating the initial Bitcoin weakness did not trigger a broader market sell-off.
  • Bitcoin Price Surges Despite Hot US Inflation Data

    Bitcoin Price Surges Despite Hot US Inflation Data

    Bitcoin Price Spikes, Shrugs Off Hot US Inflation Data

    Bitcoin’s price rose on Friday despite data revealing that U.S. inflation had accelerated, defying typical market expectations that higher inflation would pressure risk assets.

    Bitcoin Trades Near $79,000 Amid Inflation Surprise

    The largest cryptocurrency by market capitalization was recently trading close to $78,749 after jumping 2% over a 24-hour period. At one point on Friday morning in New York, bitcoin rose as high as $79,607.

    The price spike came after the release of August consumer price index data showing U.S. consumer prices accelerated, reinforcing expectations that the Federal Reserve will raise interest rates at its meeting next week.

    Core Inflation Exceeds Forecasts

    The consumer price index, excluding food and energy, climbed 0.3% in August from a month earlier, which was higher than expected. Inflation in the U.S. has been difficult to tame due to the war with Iran, which has lifted oil prices, in turn raising the costs of food, gasoline, and other goods.

    Higher inflation typically means the Federal Reserve will raise interest rates, which in turn could stop bitcoin’s price climbing higher. According to CME’s FedWatch tool, traders think there is an 85% chance interest rates will be higher by next week.

    Fed Policy Outlook and Bitcoin’s Rate Sensitivity

    Bitcoin has typically performed well in a low interest rate environment because it means people can buy more of the cryptocurrency with increased liquidity. The Federal Reserve will meet next week and reveal what it will do with borrowing costs.

    Federal Reserve Chairman Kevin Warsh, who took the helm in January, last month gave his first speech as head of the U.S. central bank and said he had more work to do to fight inflation.

    Political Context: Affordability Crisis and Midterm Elections

    The U.S. is currently in the grips of an affordability crisis and rising oil prices are a hot topic ahead of the midterm elections. U.S. President Donald Trump has reassured voters that prices will get under control and repeatedly put pressure on the central bank to lower interest rates.

    Recent Catalysts: Regulatory Clarity and Treasury Policy

    Bitcoin in August had its biggest run in years following positive regulatory news and an announcement from the U.S. Treasury. Treasury Secretary Scott Bessent announced the department would double the size of its long-dated bond buybacks, helping non-yielding assets like bitcoin and gold. The cryptocurrency then benefited from President Trump urging lawmakers to get key crypto legislation, the Clarity Act, over the line.

    This post first appeared on Bitcoin Magazine and is written by Mathew Di Salvo.

  • Bitcoin Could See Dollar Drop Bulls Want This Week, But Miss Needed Liquidity Rally

    Bitcoin Could See Dollar Drop Bulls Want This Week, But Miss Needed Liquidity Rally

    Bitcoin’s Next Macro Catalyst: ECB Decision Could Weaken Dollar Without Easing Financing Conditions

    The European Central Bank’s September 10 policy decision may strengthen the euro and push the U.S. dollar index lower, offering potential relief to Bitcoin after its recent slide below $80,000. However, a currency-driven decline in the dollar index would provide limited evidence that the financing conditions restraining risk assets have actually improved.

    Data from CryptoSlate showed Bitcoin trading around $78,800, down roughly 1% over 24 hours, after stronger U.S. labor data revived expectations that interest rates could remain elevated. That leaves Thursday’s ECB decision as the next major macro event capable of shifting the currency backdrop before U.S. inflation data returns focus to the Federal Reserve.

    Euro’s Heavy Weight in Dollar Index Creates Potential False Positive for Bitcoin

    The distinction will hinge on what moves alongside the euro. A sustained Bitcoin recovery would carry more weight if it coincides with lower real yields, easier credit conditions, and gains in both BTC/USD and BTC/EUR pairs. A falling dollar index on its own could simply reflect Europe becoming relatively more attractive.

    The complication stems from how the dollar index is constructed. The euro carries a 57.6% weight in the Intercontinental Exchange’s dollar index, far larger than the Japanese yen at 13.6% or the British pound at 11.9%. A sufficiently strong move in EUR/USD can therefore drag the index lower even if U.S. borrowing costs remain high and the amount of capital available to investors barely changes.

    That creates a potential false positive for Bitcoin traders who use the dollar index as a shorthand for liquidity conditions. If the euro appreciates while Bitcoin’s dollar price remains unchanged, the cryptocurrency becomes cheaper for a euro-based buyer. If Bitcoin subsequently rises in dollars but makes little progress in euros, part of the apparent strength can be explained by currency translation rather than broader demand.

    Recent Bitcoin Price Action Shows Mixed Signals Across Currency Pairs

    Recent trading illustrates why the distinction can be useful. Between the September 1 and September 3 UTC closes, Bitcoin gained 4.99% against the dollar and 4.63% against the euro. That advance occurred alongside a modest decline in U.S. real yields, giving the move support beyond foreign exchange.

    The pattern reversed later. From September 6 to September 7, Bitcoin fell 1.55% against the dollar and 1.65% against the euro, showing that the weakness was visible to holders on both sides of the Atlantic rather than being driven primarily by a change in the dollar-euro exchange rate.

    Thursday could produce a less straightforward configuration if the ECB sends the euro higher while bond yields and credit conditions remain restrictive.

    Euro-Area Growth and Inflation Data Offer Competing Signals for ECB

    That risk has increased because the economic backdrop facing ECB officials gives markets reasons to pull the euro in either direction without a clear shift in monetary conditions. Eurostat this week revised second-quarter euro-area growth to 0.6% from the previous quarter, strengthening the headline picture entering the meeting. Yet the composition was heavily skewed toward trade.

    Net exports contributed 0.9 percentage points to quarterly growth, while inventory changes subtracted 0.5 points. Household consumption contributed 0.2 points and fixed investment made essentially no contribution. The figures suggest a stronger aggregate economy without the same acceleration in domestic demand that would typically point to a broad improvement in financing conditions.

    Inflation is sending a similarly divided signal. Headline euro-area inflation accelerated to 3.3% in August from 2.9% in July, largely as energy inflation jumped to 14.3%. Meanwhile, inflation excluding energy, food, alcohol and tobacco eased to 2.4% from 2.5%, while services inflation slowed to 3% from 3.3%.

    That combination leaves policymakers balancing a renewed headline inflation problem against signs that some underlying pressures are cooling.

    Credit Conditions Continue to Tighten Despite Potential Euro Strength

    The ECB’s July meeting account also showed that financing conditions were already moving in the opposite direction from the relief Bitcoin bulls would prefer. Credit standards for business loans tightened somewhat in the second quarter, while mortgage standards also became stricter as banks grew more concerned about economic risks.

    The ECB said financial conditions had tightened slightly since June, with higher longer-term yields beginning to feed into borrowing costs. Business lending rates stood at 3.6% in May and market-based debt financing costs at 4%. A stronger euro after Thursday’s decision could therefore coexist with expensive credit.

    US Inflation Data Will Quickly Reclaim Focus After ECB Decision

    For Bitcoin, the trade becomes clearer only if the ECB reaction spreads beyond currencies into the markets that determine the cost and availability of capital. A euro rally that pushes the dollar index lower while real yields stay elevated would leave leveraged investors facing much the same funding environment as before the decision. Bitcoin could still rise, but the move would carry less evidence that a broader liquidity shift was underway.

    The sequencing also gives traders little time to settle on the ECB interpretation. U.S. producer-price data are due Thursday, the same day as the ECB decision, followed by August consumer-price inflation on September 11. The CPI release will return attention directly to the Federal Reserve after July consumer inflation ran at 3.4% from a year earlier.

    That leaves any ECB-driven Bitcoin rally vulnerable to being repriced within 24 hours. If the euro rises, the dollar index falls, and Bitcoin climbs in both dollar and euro terms while real yields retreat, investors would have a broader set of signals supporting renewed exposure. If U.S. inflation instead drives yields higher on Friday, traders could find that Thursday’s apparent dollar relief lasted only until Washington reopened the argument over how expensive money will remain.