US Inflation Cools: Bitcoin’s Timid Rebound Signals Market Shift

Inflation finally taps the brakes—Bitcoin responds with cautious optimism.

Market Pulse: Digital Gold Awakens

As US inflation data shows unexpected cooling, Bitcoin shakes off its lethargy with a tentative climb. No dramatic surges—just steady, deliberate movement that suggests traders are cautiously repositioning.

The Fed's shadow looms large over traditional markets, yet crypto's decentralized nature offers a tantalizing escape hatch from monetary policy whiplash. While Wall Street frets over basis points, Bitcoin quietly demonstrates its value proposition as an inflation hedge—proving once again that sometimes the best reaction isn't a roar but a calculated whisper.

Because nothing says 'healthy economy' like celebrating slightly less terrible inflation numbers.

In brief

• The unexpected drop in the US PPI in August triggers an immediate reaction on the Bitcoin market.
• Investors now anticipate a rate cut at the next FOMC meeting.
• Bitcoin gains 0.5 % in one hour, while Ethereum also records a slight increase.
• The CPI expected tomorrow could revive volatility as the Fed prepares to decide on its monetary policy.

A key indicator that moves the lines

The Bitcoin price rose by 0.5 % shortly after the release of the Producer Price Index (PPI) for August by the Bureau of Labor Statistics (BLS), which revealed an unexpected 0.1 % decrease.

Despite the spot market’s caution, this development shows a relaxation of inflationary pressure on producers, thus giving more room for monetary policy easing. This movement, though modest, reflects the crypto market’s sensitivity to U.S. macroeconomic indicators.

The key elements of this market reaction are the following :

• A 0.1 % decrease in the overall PPI in August, a figure below expectations, interpreted as a disinflationary signal ;

• A 0.3 % increase in the core PPI (excluding food, energy, and trade), the highest rise since March, indicating persistent underlying pressures ;

• BTC at $114,000, +2.3 % over a week, but still -5.7 % over 30 days, proof of a fragile recovery ;

• Ethereum also benefits from the PPI effect, with a 0.2 % price increase, reaching $4,382.10;

• 88 % of investors expect a 25 basis point rate cut, according to the CME FedWatch Tool, while 12 % bet on a 50 point reduction.

This immediate market reaction shows how much U.S. economic data directly influence crypto investors’ positioning.

While the apparent easing of inflation strengthens hopes for a looser monetary policy, the rise in Core PPI reminds us that the fight against inflation is far from won. Markets must therefore contend with mixed signals, just days away from an important Fed decision.

Market sentiment : volatility ahead and upcoming deadlines

Beyond the immediate price reaction, investors are adopting a more cautious stance ahead of a busy economic calendar.

The Crypto Fear & Greed Index, a barometer of sentiment on cryptos, dropped from 70 to a neutral score of 49, marking a sharp decline in optimism.

As highlighted by James Toledano, COO of Unity Wallet, “it is the publication of the consumer price index scheduled for tomorrow that could cause turmoil in the markets”. The CPI, expected tomorrow, could indeed tip the balance one way or the other, depending on whether it confirms or contradicts the trend observed with the PPI.

At the same time, prediction markets like Myriad show a reversal of opinion: 72% of users now believe that bitcoin will stay above $105,000 until the end of September, compared to a more pessimistic position last week.

This development reflects a recovery of confidence, albeit fragile but real. Added to this is the attention paid to other upcoming indicators, including nonfarm payrolls and unemployment figures, which will be closely watched before the FOMC’s final decision.

In a context where every macroeconomic data point becomes a potential catalyst, the crypto market remains suspended to Fed arbitrage. While a rate cut already seems widely priced in especially by major banking institutions like Goldman Sachs, any surprise, in either direction, could revive volatility.

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