- The crypto market is rallying as Bitcoin retakes $79,000 and Ethereum climbs above $2,600.
- Annual core inflation dropped to 2.4%, while monthly core CPI exceeded forecasts at 0.3%.
- Rate futures price in an 85% chance of a September hike despite the broader crypto rally.
The crypto market moved higher Friday after U.S. inflation data eased inflation concerns. Bitcoin recovered above $79,000, while Ethereum posted stronger gains. Investors focused on softer annual core inflation, even as monthly data kept interest-rate concerns alive.
According to data from Bureau of Labor Statistics data, August headline inflation rose 3.4% from a year earlier and 0.4% from July. Core CPI slowed to 2.4% annually, down from 2.5% in July. That marked its lowest level since 2021.
However, monthly core inflation rose 0.3%, above the 0.2% forecast. That hotter reading prevented a fully dovish signal. Despite this, traders responded to the broader cooling trend in annual core inflation.
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Bitcoin initially fell after the release, then reversed as buyers returned. The price climbed more than $3,000 from intraday lows. As of this writing, BTC is trading around $79,300, extending the rebound after the data release.
Ethereum recorded an even stronger move during the session. Ether climbed above $2,600 and gained about 7% over 24 hours. Solana also recovered the $100 level as traders increased exposure to major altcoins.
The wider crypto market followed the same direction. The total market capitalization moved back toward $2.7 trillion. Meanwhile, the Crypto Fear and Greed Index jumped to 73 from 56 after Thursday’s producer-price report.
Cooling Core Inflation Helps Risk Assets Recover
The annual core CPI reading gave traders a reason to buy risk assets after Thursday’s decline. Core inflation excludes food and energy, which often show larger price swings. Its decline to 2.4% suggested slower underlying inflation domestically.
Headline inflation stayed at 3.4%, partly as energy prices remained elevated. The energy index rose 2.1% during August, while gasoline prices increased 3.9%. Gasoline contributed more than one-third of the monthly headline increase.
Shelter costs also rose 0.3%, while food prices increased 0.1%. However, markets separated those increases from the weaker annual core trend. That distinction supported buying across crypto, equities, gold, and silver.
Risk assets had struggled one day earlier after producer inflation surprised to the upside. August PPI rose 0.4% for the month and 5.4% annually. Final-demand goods increased 1.1%, while diesel fuel surged 24.1%.
Friday’s CPI data therefore offered a different inflation signal. It did not erase the PPI pressure. Still, it showed annual core consumer inflation continued to cool.
Fed Hike Odds Stay High Despite Rally
Crypto prices rose even as interest-rate markets kept a hawkish view. According to data from PolyMarket, there is an 83% chance of a 25-basis-point September hike. Another cited reading placed the probability near 85%.
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That apparent split came from details inside the inflation report. Annual core inflation cooled, but monthly core inflation exceeded one cited forecast. Traders also focused on firm service inflation outside energy and shelter.
As a result, the CPI release supported two competing market views. Crypto buyers focused on slower annual core inflation. Rate traders focused more heavily on monthly pressure and Thursday’s strong PPI report.
The timing also increased attention on the data. The Federal Reserve meets on September 15 and 16. The CPI release stands among the final major inflation reports before policymakers make their decision.
Inflation remained above the Federal Reserve’s 2% target. That kept the policy outlook unsettled despite the drop in annual core inflation. However, crypto prices continued higher through the session.
Bitcoin And Ether ETFs See Fresh Outflows
The rally came even as U.S. spot crypto ETFs recorded fresh outflows. According to data from Sosovalue, spot Bitcoin ETFs posted $282.6 million in net outflows on Thursday. That marked the largest daily outflow since July 13.
Spot Ether ETFs also moved into negative territory. They recorded $29.8 million in net outflows on Thursday, erasing most of Wednesday’s $34.8 million in net inflows.
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The ETF data showed the price rebound did not depend on fresh institutional inflows through those products. Instead, the move followed the inflation release and a broader shift across risk assets.
Derivatives data also showed greater activity during the rebound. Open interest across crypto futures rose 1.52% to $429.99 billion. Trading volume increased 2.27% over 24 hours to $877.11 billion. The volatile session also triggered $897.09 million in liquidations. Long positions accounted for $493.85 million, while shorts contributed $403.24 million.
