Bitcoin Shatters $112K Barrier While SOL Soars to 7-Month Peak as Economists Dismiss Recession Worries

Digital assets surge as macroeconomic fears fade into background noise.

Bitcoin's relentless rally just smashed through the $112,000 ceiling—marking another historic milestone for the flagship cryptocurrency. Meanwhile, Solana's SOL isn't just keeping pace—it's blazing ahead to its highest valuation in seven months.

Economists, those perpetual party-poopers, are suddenly singing a different tune. Recession fears? Apparently so last quarter.

Wall Street analysts scramble to upgrade price targets while traditional finance veterans quietly recalculate their retirement portfolios. The 'told you so' moment for crypto advocates feels sweeter than expected.

Remember when they said crypto was just speculative gambling? Looks like the house is winning—and it's decentralized.

Stagflation fears are exaggerated

The BLS revisions and the impending U.S. CPI data, which is expected to show inflation sticky at around 3% (well above the Fed's 2% target), have reinstated fears of stagflation, a situation characterized by persistent high inflation combined with high unemployment and stagnant economic growth. Stagflation is widely seen as the worst outcome for risk assets, including bitcoin.

However, fears that the economy is heading into stagflation seem overdone, according to Marc Chandler, Managing Partner and Chief Market Strategist at Bannockburn Global Forex, who noted that the U.S. GDP is still running above the Federal Reserve's "trend estimate" or a non-inflationary pace.

"I think stagflation is still exaggerated. The Atlanta Fed tracker still has the GDP well above the Fed's trend estimate, its non-inflationary pace.

Yes, inflation is a bit elevated, and it is likely to be more so with the August CPI print on Thursday. However, Fed officials, such as Waller and Bowman, want to look through tariff-related increases," Chandler told CoinDesk.

"It seems to me clear that the Fed will resume its easing course next week," he added.

Traders have pencilled in a 91% chance of the Fed cutting rates by 25 basis points to 4% on Sept. 17, according to the CME's FedWatch tool. Some investment banks and traders are anticipating a larger 50-basis-point rate cut.

Focus on U.S. CPI

These easing expectations could further strengthen if Wednesday's U.S. producer price index (PPI) and Thursday's consumer price index (CPI) unexpectedly signal disinflation, which WOULD help risk assets remain bid over the near term.

That said, increased expectations could set the stage for disappointment.

"I think the CPI print this week will give us more context... If the market expects 50bps points to be cut, but FOMC Sept 17th only delivers 25bps... we'll get a sell-off," Greg Magadini, Director of Derivatives at Amberdata, told CoinDesk.